Bullard said that despite the aggressive actions taken by the Fed this year, the range in which rates currently sit – between 3.75% and 4% – is still below the “restrictive enough” level. that the US central bank considers necessary to reduce inflation to its target of 2%.
As he explained at an economic event, and as reported by Reuters, even in a supposed “cautious” interest rates should rise to around 5%while in a more restrictive scenario they could exceed 7%.
Bullard’s comments had a negative impact on the New York panel. The Dow Jones it falls 0.1%, to 33,546.32 points; the S&P 500 yielded 0.3%, to 3,946.56 points, and the nasdaq0.4%, to 11,144.96.
Softer-than-expected inflation data in recent days had fueled expectations of lower interest rate increasesbut strong retail sales numbers on Wednesday stoked concerns that the Fed could continue to tighten monetary policy.
Hopes for a less tough US central bank have caused the S&P 500 recovered 8% from the lows it recorded in late October. Despite this, the index has accumulated a 17% drop so far this year, affected by the possibility that rates end up causing a recession.
Source: Ambito
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