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Strong inflation in the United States would put the credibility of the Fed at stake

Strong inflation in the United States would put the credibility of the Fed at stake

The strong inflation in U.S it puts at stake the credibility of the Federal Reserve (Fed, central bank), which must raise its interest rates to combat inflation without disturbing the financial markets, one of its officials indicated on Monday.

“Our credibility is at stake here,” James Bullard, president of the Saint Louis branch of the Fed, stressed to the CNBC network, after registering an increase in the consumer price index of 7.5% in 12 months to January, the biggest inflation in four decades.

Bullard, with a vote on the Fed’s monetary policy committee, said the Fed must “go strong” and raise the benchmark rate to 1% by July.

Last week, Bullard caused strong reactions in the markets after making comments about the need to remove the stimulus to the economy created during the pandemic.

At its meeting at the end of January, the Fed stated its intention to raise reference rates – to zero from March 2020 to combat the pandemic – starting in March, after improvements in the labor market but in a context of high inflation that could last.

Source: Larepublica

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