fed bullard

St.Louis Pres. Richard Bullard is speaking on CNN. He is a voting member in 2022 and one of the more hawkish of Fed voting members.

  • We want to pursue best policy we can, and let market adjust appropriately
  • We’re high

    inflation

    inflation

    Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods. In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are so impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.

    Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods. In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is measured by the level of the total money supply of a specific currency, for example the US dollar, which is constantly increasing. However, an increase in the money supply does not necessarily mean that there is inflation. What leads to inflation is a faster increase in the money supply in relation to the wealth produced (measured with GDP). As such, this generates pressure of demand on a supply that does not increase at the same rate. The consumer price index then increases, generating inflation.How Does Inflation Affect Forex?The level of inflation has a direct impact on the exchange rate between two currencies on several levels.This includes purchasing power parity, which attempts to compare different purchasing powers of each country according to the general price level. In doing so, this makes it possible to determine the country with the most expensive cost of living.The currency with the higher inflation rate consequently loses value and depreciates, while the currency with the lower inflation rate appreciates on the forex market.Interest rates are so impacted. Inflation rates that are too high push interest rates up, which has the effect of depreciating the currency on foreign exchange. Conversely, inflation that is too low (or deflation) pushes interest rates down, which has the effect of appreciating the currency on the forex market.
    Read this Term the US

  • We are missing are inflation target by more than 300 basis points
  • This is a moment where we need to pivot to less accommodation
  • Good target is to have funds rate up by about 100 basis points by July 1
  • Markets have done a lot of pricing in already
  • Does not think raising rates would be risking recession
  • Labor market will get tighter
  • Inflation is eating into wage gains
  • Thinking is that quantitative easing has already drawn to a close that will end in March
  • Confident will come to a conclusion but we must act now
  • Even if there is repricing, asset holders will remain in good shape
  • Low rates feed into certain amount of exuberance
  • Would be mostly concerned about housing market

Bullard’s comments are consistent with ones made last week. At that time he started his pitch for 100 BPs by the 4th of July and also expressed his desire to raise rates as much as 50 BPs in March (but would defer to the Chair). There are 3 fed meetings between now and July. That implies 50, 25 and 25 hike trajectory (or some other combination)