To The Moon

St. Louis Fed's Bullard sees more rate hikes ahead as inflation is 'serious problem'

"We have a serious inflation problem in the U.S.", and the credibility of the Federal Reserve's inflation-targeting regime is at risk, St. Louis Fed President James Bullard said Tuesday during the Barclays-CEPR International Policy Forum.

"These levels are similar to what we have seen in the late 1970s and 1980s," he said. The U.S. needs to be careful not to replay the volatile scenario of the 1970s-80s.

In addition to its rate hikes, the U.S. central bank has embarked on quantitative tightening to help with combatting inflation. "We'll see how that part of the policy affects the inflation situation, as well."

The 300 basis points of rate increases that the Fed has implemented is close to the 1994 cycle. "I'm hopeful we can get a similar performance here, as that tightening cycle didn't result in a recession.

U.S. policy rate "has arguably" moved into restrictive territory, Bullard said. More rate increases will come in future meetings, he added.

"Are we at a correct level of policy?" he asked. "Inflation news that we received over the summer didn't go our way." He now calculates the correct level to be ~4.5%, which is close to the FOMC's median projection for its terminal rate.