- St. Louis Fed president Bullard: FOMC has been surprised to the upside over last 6 months with data including inflation - CNBC
Market news
18 June 2021
St. Louis Fed president Bullard: FOMC has been surprised to the upside over last 6 months with data including inflation - CNBC
- FOMC's hawkish tilt was due to the fact that economy has been performing better than expected this year
- It is natural to be more hawkish with higher inflation
- Recent data is very good news; says he expects to see lots of continued improvement
- Inflation more intense than expected
- Some upside risk remains with some reopening still to occur
- Upside risk of inflation is okay since that is what Fed was hoping to achieve
- Says he thinks inflation forecast will be achieved in 2021 or 2022
- Fed must remain nimble on its policy
- Upcoming fiscal debates on infrastructure are not likely to influence Fed's policy
- Fed's Chair Powell opened taper debate at last meeting; more in-depth discussion to follow
- Fed has eye on equity market valuations but different members have different opinions on how that influences policy
- I'm personally leaning toward the idea that the Fed does not need to be involved in mortgage-backed securities (MBS)
- Volatile data this time means taper may need to more state-contingent, less automatic, than the last time
- U.S. does not want to get into a housing bubble
- Fed has to be ready to adjust taper as necessary
- Says he supports the idea that month to month taper should be more dependent on conditions, the path of inflation and reopening
- Reveals that his dot reflects rate increase in late 2022
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