Fed’s Bullard expects two rate hikes next year

We heard from the more hawks of Federal Reserve officials, James Bullard, on Tuesday. He is being quoted again around the wires in Asia. CNBC is reporting that he told the news agency that he’s currently expecting the US central bank to hike its benchmark rate twice in 2022 after it’s finished winding down its bond-buying program.

''Bullard added the caveat that his viewpoint was based on current economic data and that his prediction could change as time progresses.''

“What we can do is assess the situation next spring and see where we’re at, and at that point, we can make a decision about raising the policy rate,” Bullard told CNBC’s Julianna Tatelbaum in an interview recorded Tuesday at the UBS European Conference.

In the New York session, Bullard had repeated that the Fed may have to move faster if inflation pressures persist. He has forecasted an Unemployment Rate near 3%, noting the labour market is very tight and will remain so, with Gross Domestic Product growth over 4% next year. 

“Based on where I think we are today I actually have two rate increases pencilled in for 2022 ... that could change by the time we get into the first half of next year in either direction really.”

Market implications

While Bullard is not a voting member on the Fed’s policymaking committee in 2021, he will be in 2022 and his opinions are known to move the needle in forex. However, markets are holding tight in anticipation of the US Consumer Price Index today, so there has been no reaction to the headlines thus far.