Fed should fight 'aggressively' to get inflation under control: Official

By Ovunc Kutlu

ANKARA (AA) - St. Louis Fed President James Bullard said Friday that the Federal Reserve should fight "aggressively" to get record-high inflation under control.

"We have to act forthrightly and aggressively to get inflation to turn around and get it under control," he said during a virtual discussion panel about central banks and inflation held in Zurich, Switzerland by multinational investment bank UBS.

Supporting that frontloading interest rates early will bring down inflation to the Fed's 2% target, Bullard warned that economies could be otherwise exposed to "a decade of high inflation."

"We need to raise interest rates early in order to bring inflation under control in the short-term. Inflation disrupts price signals in the economy," he explained.

Bullard said he expects the Fed's federal funds rate will be raised to 3.5% by the end of this year, which currently stands at the 1.5%-1.75% target range.

The Fed made a 75-basis-point rate hike on June 15, after a 50-basis-point hike in May and a 25-basis-point hike in March.

The central bank's aggressive policy has caused worries among investors and economists that its monetary tightening could cause a recession.

Bullard, however, stressed that the US economy is strong and has shown "tremendous resilience."