Speaking at an online meeting of the Council on Foreign Relations on Monday, St. Louis Fed Chairman Brad James Bullard said the Fed has a "good plan" to curb surging inflation and that "tighter market pricing based on expectations is helping us control inflation."

Brad, the famous "Eagle King" of the Federal Open Market Committee of the Federal Reserve, stressed that the Fed funds rate should be raised to at least 3.5% by the end of this year. This would be more than 300 basis points higher than the effective interest rate of 0.33%.

Mr Brad added that he would not "rule out" an increase of 75 basis points, although he said "a rate hike of more than 50 basis points is not my basic assumption". That would be much higher than the Fed's typical incremental rate hike of 25 basis points.

In addition to the path that the Fed has been active in raising policy rates, Brad hopes to shrink the balance sheet as soon as possible at the Fed's meeting in early May. According to CME Group's FedWatch tool, the probability that the Fed will raise interest rates by 75 to 100bp at its May meeting and the current target rate of 25 to 50bp is 88.8 per cent.

At the Fed meeting in March, when it announced a 25% increase in interest rates for the first time since 2018, Brad decided that interest rates should be raised by 50 basis points and began to cut the Fed's nearly $9 trillion balance sheet.

In addition, Brad also said that "the 1994 austerity cycle may be the best example"-from 1994 to early 1995, the Federal Reserve under Alan Greenspan raised interest rates from 3% to 6%, achieving a "soft landing" for the economy. inflation has been brought under control and the economy has continued to grow strongly, achieving the longest 10-year expansion in history.

Last week, Mr Brad warned that the idea that the Fed could curb inflation by raising interest rates moderately was a "fantasy"-the Fed's current policy of trying to push interest rates to a "neutral level" was a bit unrealistic.

The prevailing view within the Fed is that interest rates need to be pushed to a "neutral" level (estimated at 2.4%) this year, which neither promotes nor restricts the level of economic activity, which Mr Brad had estimated at 2 per cent after the March meeting.

Brad believes that the first goal of the FOMC should be to reach a neutral interest rate as soon as possible. Under the Taylor rule, neutral interest rates must be at least 3.50%, and he said he did not want FOMC's policy actions to disrupt the market, but the Fed needed to act quickly.

We want to reach neutral interest rates as soon as possible. I think that's a word today. I even said that we hope to reach above neutral as early as the third quarter and try to put further downward pressure on inflation at that time.

The Eagle King's speech was more hawkish than it was a month ago, when he called for a 3 per cent federal funds rate by the end of the year.

Higher interest rates will lower inflation expectations and lower inflation without harming the labour market. The unemployment rate will fall below 3% this year, compared with 3.6% in March, a historically low level. The Fed can control inflation without a recession.

But Goldman Sachs Group had previously believed that the Fed would face the daunting task of tightening monetary policy and cooling inflation without plunging the US economy into recession. Jan Hatzius, chief economist of Goldman Sachs Group, estimates that the probability of a US recession in the next 12 months is about 15 per cent, compared with a 35 per cent chance of a recession in the next two years.