MNI BRIEF: Bullard-Inflation Is Still Too High, Policy Working

Inflation is far too high despite today's CPI figures showing a sixth month of decline, although the Federal Reserve is finally getting interest rates to levels that cool price pressures, St. Louis Fed President said Thursday.

“The Fed is going to have to maintain rates at high enough levels to make sure inflation is moving down and staying down on a consistent basis,” Bullard, citing his own Taylor-rule calculations suggesting rates must edge at least above 5% to be sufficiently restrictive and bring inflation back to its 2% target.

Bullard cited the risk that inflation doesn't let up as quickly as markets are pricing in. "It could be that inflation starts to go in the other direction and the Fed would have to react to that," he said. (See MNI INTERVIEW: Fed Rates To Peak Well Above 5%, No Cuts In 2023)