Bullard: Favors 100 basis point increase by July 1st

Fed's Bullard (voting member in 2022) is on the wires saying:

• He favors a 100 basis point increase by July 1
• Would prefer 50 BPs in March but will defer to Powell
• Would favor changing rates between meeting.
• Fed balance sheet reduction may require asset sales

Here's the full quote:

“I’d like to see 100 basis points in the bag by July 1,” Bullard, a voter on monetary policy this year, said in an interview with Bloomberg News on Thursday. “I was already more hawkish but I have pulled up dramatically what I think the committee should do.”

In an earlier post today I wrote:

"The CPI data continues move higher which is pushing the Fed back further into the corner as it remains slow to react. Will they play catch up in March with a 50 basis point hike?

Admittedly, the market has done the tightening for the Fed with 2 year up toward 1.5% and 10 year pushing 2%, but the Fed still hasn't tightened with the Fed funds target still at 0.25% in the short term (and the Fed still buying bonds and MBS). Corporations continue to talk about the higher inflationary pressures with the commodity prices trending higher.

Will the Fed - and the markets - get tired of waiting and waiting and waiting for the inflation numbers to start to pull back or will the they throw in the towel?. The inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term train continues to move away from the station and we know it is hard to stop a train when it gets going. . The next meeting is not until March 16. It is currently February 10. Remembering back to old days, numbers like this (and the jobs report from last week) would have traders on edge for a rate hike around this time of day - ahead of the meeting. Those days seem to be behind us as the Fed - and other central banks for that matter - are exploring new ways of monetary policy, with a kinder, gentler approach. Time will tell...."

Bullard was thinking the same thing about the need to act may be between meetings sometimes.

Stocks have reacted to the downside on the comments with the Nasdaq down -142 points or -0.96%. The S&P is back below the 100 day MA and trades down -45 points at 4542.

The USD has also moved higher.

Yields are moving higher as well with the 10 year up to 2.035%.

The market is now pricing a >60% chance of 50 BPs in March.That's up from 30% before the CPI data.