Federal Reserve President St. Louis James Bullard expressed confidence that the central bank can overcome inflation and he supports the central bank to increase the pace in the battle with inflation.
Bullard said that more aggressive interest rate hikes now would give the FOMC a better chance of lowering inflation.
"We have not yet reached the stage where the committee is putting the so-called terminal rate," he said
The comments came a week after Bullard and Cleveland Fed President Loretta Mester both said they were pushing for a half-percentage-point rate hike at the last meeting, rather than the quarter-point move ultimately approved by the FOMC.
They said they would continue to favor more aggressive measures at the March meeting. Markets were volatile following the statement as well as a batch of inflation data that came in higher than expected, fueling concerns that the Fed has more work to do to lower prices.
"If inflation continues to decrease, I think we will be fine," he said. "Our risk now is that inflation doesn't go down and go up again, and then what to do? We have to respond, and if inflation does not start to come down, we may have to risk a repeat of the 1970s”.
Despite tougher talks and tepid inflation data, markets still expect the Fed to continue its quarter-point move next month, based on CME data expectations.
Investors worry that higher rates could tip the economy into recession. The major averages saw their biggest selloff of the year Tuesday, erasing all of the Dow Jones Industrial Average's gains.
