Bullard Speaks with Washington Post about Inflation, Tapering

August 4, 2021

St. Louis Fed President James Bullard gave his perspective on the U.S. economy, inflation risks and tapering the Fed’s bond purchases, during an appearance on Washington Post Live.

In discussing U.S. inflation, Bullard said he thinks it will be more persistent than many people expect. He noted that if core PCE inflation is 3.5% for all of 2021, then he would expect it to be between 2.5% and 3% in 2022 and then gradually come down to the Federal Open Market Committee’s 2% target in the subsequent years.

Asked about the Fed’s $120 billion per month of bond purchases, which include mortgage-backed securities, Bullard said, “I don’t think that we need to continue with these purchases now that we’ve got new risks on the horizon and possibly inflation risks on the horizon.” He also said he thinks the FOMC should get the tapering going and finish the asset purchases by the end of the first quarter of 2022.

Bullard also discussed job creation, the booming housing market, the end of supplemental unemployment insurance payments in some states, and factors affecting individuals’ return to work.

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