August 27, 2021
St. Louis Fed President James Bullard shared his views on tapering the Fed’s asset purchases and other aspects of monetary policy during an interview with Fox Business.
Bullard reiterated his preference for finishing the asset purchases by the end of the first quarter of 2022. He noted that the FOMC will have a better sense of whether inflation will moderate in 2022 in the first half of next year.
Bullard highlighted the need for optionality depending on what happens with inflation: “If it doesn’t moderate, then I think the Fed is going to have to be more aggressive in 2022 than we would otherwise be,” he said. “If it does moderate in 2022, then we’re in great shape for that, so we can wait to raise the policy rate a ways in the future.”
Regarding his outlook for inflation, Bullard said he thinks inflation will moderate some heading into 2022 but not as much as many people are hoping for. He expects core PCE inflation to be above 2.5% next year.
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