Fed's Bullard: It Makes Sense to Be Hawkish on Rates

The transcript discusses Bill Dudley's comments on terminal rate expectations, suggesting a 3-4% rate, while others expect it to remain below 2%. The speaker believes rates will only rise to pre-pandemic levels, emphasizing that the pre-pandemic economy was not at 0% interest. A hawkish policy now could prevent aggressive future actions and manage inflation risks. The idea of front-loading rate hikes is considered to avoid recession, with historical context from the 1970s. The speaker concludes that a 1.5-2% rate, similar to 2018-2019 levels, could suffice without exacerbating inflation.

What concerns does the speaker express about moving too aggressively with rate hikes?

What does the speaker suggest about the level of interest rates needed to remove upward pressure on inflation?