September Rate Hike Isn't Too Bad of an Idea, Bullard Says

• Fed's core PCE projections remaining above 3% for multiple years (2023-2026) indicate a de facto 3% inflation target, necessitating action to reaffirm the 2% target.
• Strong economic conditions, including 4% Q3 GDP, high wealth-to-disposable income, and a tight labor market, provide an opportune moment for the Fed to act.
• Bullard explicitly states a September rate hike is 'not too bad of an idea' or, at minimum, a signal for future hikes is needed to avoid higher longer-term yields and maintain market credibility.

James Bullard, former St. Louis Fed President, suggests the Federal Reserve should consider a September rate hike or signal future tightening. He argues this is necessary to re-establish credibility in fighting inflation, given persistent PCE projections above 3% and a robust economy with strong GDP, high wealth-to-income ratios, and a low unemployment rate.