WASHINGTON - Former St. Louis Federal Reserve President James Bullard has suggested that the Federal Reserve might consider reducing interest rates potentially by March, even if inflation has not yet hit the 2% target. In a recent interview, Bullard highlighted the importance of timely policy adjustments to prevent the need for more drastic measures later on.
Bullard, who has been known for his hawkish stance on inflation, indicated that he expects core inflation to approach the 2% mark by the third quarter of this year. This forecast comes despite ongoing concerns about the tight labor market and persistent inflationary pressures.
Following Bullard's remarks, there was a noticeable dip in Treasury yields. The ten-year note fell to 4.10%, and the two-year notes saw a decline to 4.32%.
The personal consumption expenditures price index, a key measure of inflation, dropped to an annualized rate of 2.6% in December last year. The next release is scheduled for January 26. While this decrease suggests a cooling of inflation, some analysts remain wary of the potential risks associated with premature policy easing, particularly in light of the still-tight labor markets.
Bullard's comments have added to the debate over the Fed's next steps as it navigates between curbing inflation and supporting economic growth. The possibility of a rate cut by March, as posited by Bullard, will be closely watched by markets and policymakers alike in the coming weeks.
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