Bullard Speaks with CNN International about U.S. Monetary Policy

February 17, 2022

St. Louis Fed President Jim Bullard discussed the high inflation in the U.S. and shared his views on appropriate monetary policy during an interview on CNN International.

Bullard said that he expects the Federal Open Market Committee’s preferred inflation measure (PCE inflation less food and energy) to be about 5.2% in the next report. This means that the FOMC would be missing its inflation target on that measure by more than 300 basis points, he said, adding that “policy is still at rock bottom lows” in terms of interest rates and that asset purchases are still going on.

“This is a moment where we need to shift to less accommodation, and the debate is about how fast to do that,” he said. He reiterated his view that a good target would be to have the policy rate up at about 100 basis points by July 1. “That does mean we would have to move faster and more nimbly than we have in recent decades, but I think that’s probably the appropriate policy,” he said. He also noted that the FOMC needs some risk management in case inflation doesn’t moderate in the second half of the year.

Bullard also addressed the idea that raising the policy rate would risk recession. “This is just talking about the very first moves from an extremely accommodative policy that we used during the pandemic, and I don’t think those first moves are very likely to tip the economy into recession,” he said. He added that he is still expecting the U.S. economy to grow 3.5% to 4% this year and labor markets to get even tighter.