In recent months, the US economy has been under a lot of stress. Everyone in the world believed that the United States was about to go into a recession as a result of high inflation and interest rates. This notion was put forth by executives from illustrious banks. In a recent tweet reply, Elon Musk also expressed his opinion that the current recession could last until 2024.
The president of the Federal Reserve Bank of St. Louis, James Bullard, delivered a speech during a webcast interview with MarketWatch and Barron’s. Bullard spoke about the necessity for policymakers to ramp up interest rate hikes in the coming months. He stated that it was necessary to contain inflation. Bullard also stated that there is a rising expectation that inflation will go away naturally.
Bullard says a recession can be avoided
September saw a decrease in inflation to 8.2%, the lowest level since February of this year. Even though the current number is lower, there may not be much to take away from this. Additionally, October’s inflation decreased to 7.7%. However, inflation remains the highest in four decades.
Bullard stated that the Federal Reserve must raise interest rates in order to meet policymakers’ 5% to 7% target. He also mentioned that the interest rates have to stay there all through 2023 and 2024 to curb inflation.
“Labor markets continue to be extremely strong,” Bullard said, citing projections for adding 200,000 jobs. “The strength gives Fed officials license to pursue a disinflation strategy,” according to Bullard.
He also added that he sees slow growth rather than a recession as the most probable outcome.