Fed Bullard supports a 50 basis point rate hike for the first time by 100 basis points by July 1

St. Louis Fed President Bullard Eastern Time said Thursday that it supports a cumulative 100 basis point hike by early July, including a one-time 50 basis points since 2000 to deal with the worst inflation in four decades.

Bullard's statement detonated the market, us stocks fell short-term, the current NASDAQ decline extended to 1.46%, the S&P 500 fell 1.45%, the Dow fell 1.23%. The dollar index rose more than 20 basis points on the short term to 95.52. The US 10-year Yield rose short-term to 2.043%. Fed swaps show a 75% chance of a 50 basis point rate hike in March.

Brad, who has the Fed's monetary policy vote this year, said in an interview: "I hope to raise interest rates by 100 basis points by July 1, I was already more hawkish, but still raised expectations of what the committee should do." ”

Currently, Brad's plan includes three rate hikes, starting with a balance sheet reduction in the second quarter, and then deciding on the trend of interest rates in the second half of the year based on the latest economic data. He said he had not yet decided whether the March meeting should start at 50 basis points and would respect Fed Chairman Jerome Powell's decision. Powell said at a press conference in January that the idea could not be ruled out.

Commenting on the latest inflation data, Brad said: "The issue of inflation worries me and the Fed, the inflation rate is at its highest level in more than 40 years, and I think we must greatly increase our flexibility and responsiveness to the data." ”

Bullard noted that policymakers are still most concerned about the March 15-16 policy meeting and has pledged to end the asset purchase program before starting to raise interest rates.

Brad said: "There have been times when the FOMC, faced with a situation like this, is going to meet and adjust 25 basis points, and I think we should be flexible in this approach." ”

Chris Zaccarelli, chief investment officer of the Independent Advisor Alliance, commented: "Brad's remarks of raising interest rates by 100 basis points by July 1 have frightened the market. Although he only indicated to the market that interest rates could rise higher and faster than previously expected. ”

Traders are now betting that the Fed will start raising rates at its March meeting, with money markets seeing a 60% chance of raising rates by 50 basis points in March, compared to a 30% chance of inflation data ahead of the release of inflation data.

Brian Price, head of investment management at Commonwealth Financial Network, said: "I expect that after this inflation report is released, we will see volatility return to the market. Investors may need to be prepared, as risk assets can go down a difficult journey before inflation starts to fall. ”