- St. Louis Fed president Bullard: Fed should start taper in autumn
Market news
30 July 2021
St. Louis Fed president Bullard: Fed should start taper in autumn
- Says Q2 GDP report was very good on the whole
- Says he still expects 7% growth this year
- Says he expects above-trend growth "for quite some time" in US
- Productivity seems much higher and technology is helping that
- There is 'overwhelming' anecdotal evidence of tight labor markets in US, seeing offers of hiring bonuses and other benefits
- Jobs could be fully recovered by next summer, which would meet Fed's condition for raising rates
- The criteria for labor market recovery will be met sooner than many expect even under benign assumptions about growth
- This year's inflation is enough to make up for some of the past downside misses; Fed should "declare success" on meeting average inflation target
- Fed is coming up a little short in preparing for a possible high inflation shock
- Fed should start taper in autumn and go "fairly rapidly" to end taper by the end of Q1
- Ending the taper in early 2022 would open the way for a rate increase if needed
- Financial markets are well prepared for taper
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