Die Fed wird ihre Geldpolitik straffen, die Frage ist nur, wie schnell.

By Howard Schneider and Ann Saphir

WASHINGTON/SAN FRANCISCO, Jan 6 (Reuters) – Alarmed by persistently uncomfortably high inflation, even more moderate Federal Reserve policymakers now agree they will have to tighten monetary policy this year, so the debate is no longer about whether to do so, but how quickly.

St. Louis Fed chief James Bullard said Thursday that the agency could raise interest rates in March and is now in a „good position“ to take even more aggressive action against inflation as needed.

San Francisco Fed President Mary Daly, long a moderate counterpoint to Bullard’s hawkish stance, said at a separate event that she also expects interest rate increases this year, but warned that overly aggressive tightening could hurt the labor market.

And speaking this week, Minneapolis Fed President Neel Kashkari maintained that he now expects two rate hikes this year, a reversal of his long-held view that the central bank should delay hikes to 2024.

Fed policymakers are now effectively in two groups: „those who want to tighten monetary policy and those who want to tighten monetary policy even faster,“ wrote Bill Nelson, a former Fed economist who is now chief economist at the Bank Policy Institute.

That’s a big change from a few months ago, when they could almost be divided into three: those who support faster tightening, those who took a slower approach, and a contingent against hikes for a year, if not longer.

But inflation is marching along at more than double the Fed’s 2% target and there is a dwindling conviction at the central bank that the millions of workers sidelined by COVID-19 will quickly return to the labor force or that the supply chain constraints driving prices will soon ease.

So the patience view has given way to an eagerness to take action that is at odds with the continued, albeit slowing, purchases of Treasury bonds and mortgage-backed securities intended to stimulate the economy.

Bullard on Thursday laid out the view of a more aggressive path.

The Fed „is in a good position to take additional action as needed to control inflation, including allowing passive balance sheet liquidation, raising the benchmark rate, and adjusting the timing and pace of subsequent benchmark rate hikes,“ he said.

An initial rate increase could be approved „at the March meeting (…) Subsequent rate increases during 2022 could be brought forward or delayed depending on the evolution of inflation,“ Bullard added.
Daly erklärte unterdessen auf einer Veranstaltung der irischen Zentralbank, dass die Fed die Zinssätze in diesem Jahr angesichts eines „sehr starken“ Arbeitsmarktes und zur Eindämmung der hohen Inflation, die wie eine „repressive Steuer“ wirkt, anheben sollte. Dennoch solle die Zentralbank mit „Augenmaß“ vorgehen, sagte er.