Federal Reserve Bank of St. Louis President James Bullard said the U.S. economy is proving more resilient than expected and repeated his call for the central bank to keep raising interest rates.

“I think we are going to have to get north of 5%. Right now I’m still at 5.375%,” Bullard told CNBC in an interview Wednesday. “We’ve got a little ways to go here and I’ve argued that ‘hey, let’s get to where we want to go’ and then from there we can see how the data come in. Let’s hope that we get disinflation in 2023.”

Bullard is not a voter this year on the policy-setting Federal Open Market Committee.

Officials raised rates by a quarter percentage point at their meeting early this month, moderating the pace of their most aggressive tightening campaign in a generation.

The downshift followed a half-point move in December and four consecutive 75 basis-point increases. Some of Bullard’s Fed colleagues have argued for staying on the path of gradual 25 basis-point moves going forward to reduce the risk of overtightening.

“It has become popular to say well let’s slow down and feel our way to where we need to be,” Bullard said. “But we still haven’t got to the point where the committee put the so-called terminal rate. Get to that level and then feel your way around and see what you need to do.”

Investors will get more clues on how the hawks and doves sparred over this critical question when minutes of the FOMC’s Jan. 31-Feb. 1 meeting are released this afternoon.

Bullard said the repricing of the Fed rate path by Wall Street in recent weeks reflects recent strong data, including huge employment gains, that pushed back against unwarranted pessimism about the U.S. economic outlook.

“The U.S. economy might be more resilient than markets thought, let’s say, six or eight weeks ago,” Bullard said. “Markets have overpriced a recession in the second half of 2022 and overpriced a recession in the first half of 2023. Maybe they are overpricing the chance of recession in the second half of 2023.”

Bullard has been one of the more outspoken hawks on the committee since the economy began reopening from the pandemic, arguing for robust action to curb surging inflation.

He said last week that he would not rule out supporting a half-point interest-rate hike at the Fed’s March meeting if that’s what is needed to get price pressures under control.

At the same time, Bullard said he was encouraged about the prospects for disinflation and cited a shift by consumers to do more shopping at retail giant Walmart. Inflation falling will be caused by retailers and other businesses not raising prices for fear of losing market share, he said.

“Consumers are trading down and they are benefiting,” Bullard said. “That is what I heard from Walmart. That sounds like a disinflationary process. That is how the disinflation is going to occur.”

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