Former Federal Reserve Bank of St. Louis President James Bullard said raising interest rates in September would not be a bad idea.
This perspective suggests a potential shift in monetary policy that could increase borrowing costs for consumers and businesses across the U.S. if the Federal Reserve adopts a similar hawkish stance.
Bullard, who also serves as the dean of Purdue University's Mitch Daniels School of Business, said the comments during an appearance on Bloomberg Television’s program “Bloomberg Surveillance” [1]. He said that the Federal Reserve is likely to resume tightening later in 2026 because core inflation remains too high [1], [2].
During the discussion, Bullard specifically addressed the timing of potential policy changes. "A September rate hike isn’t too bad of an idea," Bullard said [1].
The argument for additional tightening is rooted in current economic data regarding price stability. Bullard said that "core inflation is too high" [2], which he believes justifies a more aggressive approach to monetary policy to prevent long-term price instability.
The statements were first reported on July 7, 2026 [2]. While Bullard no longer holds a voting position at the Federal Reserve, his analysis is often monitored by markets due to his history with the central bank.
Monetary tightening typically involves raising the federal funds rate to cool an overheating economy. By increasing the cost of credit, the Fed aims to reduce spending and bring inflation down toward its target level. Bullard's suggestion implies that previous efforts may not have been sufficient to curb the underlying drivers of core inflation.
“"Core inflation is too high."”
Bullard's comments signal a concern that inflation is more persistent than current market expectations suggest. If the Federal Reserve follows this logic and raises rates in September, it could lead to increased volatility in equity markets and higher yields on government bonds as the era of potential rate cuts is pushed further into the future.
