Market interest rates on rise, responding to Fed: Official

ANKARA

Market interest rates have increased substantially, partially in response to the Federal Reserve's monetary tightening action, St. Louis Fed President James Bullard said Wednesday.

"The fact that market interest rates have moved above their pre-pandemic benchmarks while the policy rate has not can be read as an illustration of the effect of credible forward guidance," he said during an event hosted by the Economic Club of Memphis.

"The Fed still has to follow through to ratify the forward guidance previously given, but the effects on the economy and on inflation are already taking hold," he added.

Bullard stressed that the near-term inflation expectations of financial markets, households and businesses increased last year.

Noting that the Fed is assured to make further rate hikes at coming meetings, he said foreign central banks are also increasing their interest rates and allowing their balance sheets to shrink.