The U.S. Federal Reserve could raise interest rates swiftly this year and forge a “stellar” economy ahead if it can pull off a repeat of the success of the central bank’s 1994 tightening cycle, St. Louis Fed President James Bullard said on Monday.
“That tightening episode caused some disruption that year,” Bullard said during an event held by the AXA-Barcelona School of Economics in Barcelona, Spain. “However, I have always felt that set up the U.S. economy for a stellar performance in the second half of the 1990s … I hope we can get something like that this time.”
Bullard has been a vocal backer of aggressive Fed action to tame stubbornly high inflation that is running at more than three times the U.S. central bank’s 2 percent goal. The 1994 tightening cycle saw the Fed double interest rates to 6 percent in seven rapid-fire hikes that included one 75 basis point and two 50 basis point moves. The Fed’s so-called soft landing, in which a recession was averted, was followed by a period of rapid growth and a historically tight labor market….