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

James Bullard argues the Federal Reserve should consider a September rate hike or at least signal later 2026 action to reestablish inflation-fighting credibility, citing sticky core PCE projections and a strong economy. He warns that if the Fed's September dot plot signals little action, markets would likely react by pushing longer-term yields higher. - Bullard says the Fed's core PCE projection above 3% looks like a de facto 3% inflation target. - He sees Q3 GDP tracking near 4% and labor market conditions as strong, supporting Fed action now. - He would consider a September rate hike or at least a signal for later in 2026. - Bullard notes the September meeting has unusual forward guidance via the dot plot. - He says Chairman Walsh could use Jackson Hole to alter or abolish the dot plot. - If the dots show the Fed is not planning to do much, he expects markets to dislike it and longer-term yields to rise.