MNI BRIEF: Fed’s Bullard Sees Peak Rates 5-5.25% At A Minimum

St. Louis Fed President James Bullard said Thursday he would like interest rates to rise to at least 5% to 5.25% before the central bank can hold them there for a while in order to combat stubbornly high inflation.

“Five to 5.25% that’s a minimum level according to this analysis that would at least get us in the zone” of restrictive policy Bullard told reporters following a presentation in which he noted Taylor rules suggest rates must climb to between 5% and 7% in order to get U.S. inflation back down toward the Fed’s 2% target.

Richmond Fed President Thomas Barkin told MNI in a recent interview persistent inflation may force interest rates to peak higher than previously expected. Bullard said it’s too soon to get optimistic about the inflation picture despite a better-than-expected October CPI. “We’re really not looking at a good inflation situation for the U.S. We’ve been burned already two years in a row.”