Bullard, who has been known for his hawkish stance on inflation, indicated that he expects core inflation to approach the 2% mark by the third quarter of this year. This forecast comes despite ongoing concerns about the tight labor market and persistent inflationary pressures.
Following Bullard’s remarks, there was a noticeable dip in Treasury yields. The ten-year note fell to 4.10%, and the two-year notes saw a decline to 4.32%.
The personal consumption expenditures price index, a key measure of inflation, dropped to an annualized rate of 2.6% in December last year. The next release is scheduled for January 26. While this decrease suggests a cooling of inflation, some analysts remain wary of the potential risks associated with premature policy easing, particularly in light of the still-tight labor markets.
Bullard’s comments have added to the debate over the Fed’s next steps as it navigates between curbing inflation and supporting economic growth. The possibility of a rate cut by March, as posited by Bullard, will be closely watched by markets and policymakers alike in the coming weeks.
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Source: Economy - investing.com
