Bullard Discusses Inflation and U.S. Monetary Policy with Bloomberg

November 16, 2021

St. Louis Fed President Jim Bullard shared his views on U.S. monetary policy and managing the inflation risk during an interview on Bloomberg Surveillance.

Bullard said that core PCE inflation, at 3.6%, is quite high and doesn’t have the reputation of moving down very easily. He suggested that, in his view, the Federal Open Market Committee should “tack in a more hawkish direction” in the next couple of meetings to appropriately manage inflation risk. “If inflation just happens to go away, we’re in great shape for that. We’re set up for that,” he said. “But if inflation doesn’t go away as quickly as many are currently anticipating, then it’s going to be up to the Committee to keep inflation under control going forward.”

Bullard said the FOMC could speed up the taper if appropriate, which would allow the Committee to assess the data a bit earlier and decide what to do on the policy rate. He discussed other considerations for policy if needed, including playing up the idea that raising the policy rate wouldn’t have to wait until the end of the taper, and allowing runoff of the balance sheet at the end of the taper instead of waiting on that decision for a while.

He also discussed his current projections for two policy rate increases in 2022, what he thinks would be a normal level of interest rates, the potential for the U.S. economy to move to a period of higher productivity growth, and his expectations for continuity in Fed policy no matter how the decision for Fed chair comes out.

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