The Monetary-Fiscal Policy Mix and Central Bank Strategy

May 12, 2023

St. Louis Fed President Jim Bullard presented “The Monetary-Fiscal Policy Mix and Central Bank Strategy” at a conference hosted by Stanford University’s Hoover Institution.

Bullard said that the pandemic fiscal-monetary response created too much inflation. To eliminate the excess inflation, the fiscal-monetary response must be countered, he noted, adding that this is happening.

The fiscal stimulus is receding, and monetary policy has been adjusted rapidly in the last year to better align with traditional central bank strategy, he said. “Accordingly, the prospects for continued disinflation are good but not guaranteed,” he added.

Note: For an updated version of the figure on Slide 20 that has corrected data for the first six months of 2019, see Bullard’s June 2023 Regional Economist article, “Is Monetary Policy Sufficiently Restrictive?”

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