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Bullard Discusses Economy, Balance Sheet Policy, Fiscal Policy, Inflation with WSJ

January 12, 2021

St. Louis Fed President James Bullard discussed the U.S. economic outlook, monetary policy, fiscal policy and inflation during a Wall Street Journal Newsmakers Live Q&A.

Bullard noted that the report of December job losses didn’t change his overall economic outlook because vaccines have come online sooner than he would have expected. He said that the outlook for 2021 remains quite strong, and he expects growth to be well above trend and unemployment to come down below 5%.

He also described his view that the initial fiscal policy response to the COVID-19 crisis was designed for a larger economic shock than what has occurred. In addition, he noted that the level of real disposable income for 2020 suggests the policy of trying to keep disrupted households whole has been successful.

Inflation looks set to move somewhat higher, Bullard said. Market-based inflation expectations have moved up, and a lot of the ingredients for inflation seem to be in place, he noted.

He also discussed the Fed’s purchases of U.S. Treasury securities and mortgage-backed securities, noting that the FOMC is waiting for further substantial progress toward their maximum employment and price stability goals. “The idea is that we want to get through the pandemic and sort of see where the dust settles, and then we’ll be able to think about where to go with balance sheet policy,” Bullard said.

During the audience Q&A, he also addressed questions on financial stability risks and productivity, among other topics.

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