Fed's Bullard: Rates aren't high enough now

Federal Reserve's president and CEO of the Federal Reserve Bank of St. Louis James Bullard: in a CNBC interview has said rates aren't high enough now.

Key notes

• 3.75% - 4% is my target for this year.
• Says he likes the idea of front loading; it ‘shows you are serious about inflation fight’.
• Rates aren't high enough now.
• Labour market is strong right now.
• Front loading shows you are serious about the inflation fight.
• Rates aren't high enough now.
• Need to get the policy rate to where it pushes downward pressure on inflation.
• After rates get above 3.75%-4%, not quite sure what's next.    
• My baseline is that inflation will be more persistent than many expect.    
• Inflation will be higher for longer.    
• That risk is underpriced in the market. 
• Markets are showing outstanding confidence in the Fed, hope they are right.
• The risk is that we may have to be higher for longer.    
• Asked about the stock market, says he tries to stay away from equity pricing.    
• I don't want to take too much signal from the stock market.    
• Bond markets give a little better pricing of the risk we will have to do more.   
• You should be able to hit the inflation target even if there are factors out of Fed's control.
• Recessions are not that predictable.    
• We are of course taking recession risk, but we don't know one way or the other.    
• GDP was positive for the 2Q, consistent with what businesses say about hard-to-hire
• After the pandemic, we set out a path on asset-buying that was 'overboard'.    
• Now we have to switch back; the Fed has to get inflation back to 2%.

Meanwhile, Fed funds futures traders are pricing in a 59% chance that the Fed will hike rates by another 75 basis points at its September meeting, and a 41% probability of a 50 basis points increase. The US dollar slipped on Thursday in choppy trading as investors waited on a speech by Federal Reserve Chairman Jerome Powell on Friday for further clues about the ongoing pace of the US central bank’s rate hikes.