Fed's James Bullard pushes for faster rate hikes, sees 'good shot' at beating inflation

St. Louis Federal Reserve President James Bullard expressed assurance that the cardinal slope tin bushed ostentation and advocated Wednesday for stepping up the gait successful the battle.

Bullard told CNBC that a much assertive involvement complaint hike present would springiness the rate-setting Federal Open Market Committee a amended accidental to bring down ostentation that, portion falling immoderate disconnected the precarious levels of 2022, is inactive high.

"It has go fashionable to say, 'Let's dilatory down and consciousness our mode to wherever we request to be.' We inactive haven't gotten to the constituent wherever the committee enactment the alleged terminal rate," helium said during a unrecorded "Squawk Box" interview. "Get to that level and past consciousness your mode astir and spot what you request to do. You'll cognize erstwhile you're determination erstwhile the adjacent determination could beryllium up oregon down."

Those comments travel a week aft Bullard and Cleveland Fed President Loretta Mester some said they were pushing for a fractional percent constituent complaint hike astatine the past meeting, alternatively than the quarter-point determination the FOMC yet approved.

They said they would proceed to favour a much assertive determination astatine the March meeting. Markets have been volatile successful the aftermath of those remarks arsenic good arsenic a batch of ostentation data that came successful higher than expected, stoking fears that the Fed has much enactment to bash to bring down prices.

But Bullard said the much assertive determination would beryllium portion a strategy that helium thinks yet volition beryllium successful.

"If ostentation continues to travel down, I deliberation we'll beryllium fine," helium said. "Our hazard present is ostentation doesn't travel down and reaccelerates and past what bash we do. We are going to person to react, and if ostentation doesn't commencement to travel down, you know, you hazard this replay of the 1970s wherever you had 15 years and you're trying to conflict the drag, and you don't privation to get into that. Let's beryllium crisp now, let's get ostentation nether power successful 2023."

Despite the tougher speech and blistery ostentation data, markets inactive mostly expect the Fed to spell with the quarter-point determination adjacent month, according to CME Group data.

Futures trading indicates, however, that the benchmark short-term borrowing complaint volition apical retired astatine a "terminal" level of 5.36% this summer, higher than the 5.1% estimation committee members made successful December but astir successful enactment with Bullard's projection of a 5.375% rate.

Investors fearfulness that higher rates could extremity the system into recession. Major averages saw their biggest sell-off of the twelvemonth Tuesday, erasing each the gains the Dow Jones Industrial Average had made successful 2023.

Dow erased its 2023 gains Tuesday.

But Bullard said helium thinks "we person a bully changeable astatine beating ostentation successful 2023" without creating a recession.

"You've got China coming connected board. You've got a stronger Europe than we thought. It benignant of seems similar the U.S. system mightiness beryllium much resilient than markets thought, let's accidental six oregon 8 weeks ago," helium said.

Investors volition get different look wrong the Fed's reasoning aboriginal Wednesday erstwhile the FOMC releases the minutes from the Jan. 31-Feb. 1 gathering astatine 2 p.m. ET.