Federal Reserve Bank of St. Louis Governor James Bullard advocated proactive Tuesday as the central bank begins to end its monthly bond-buying program in case inflation becomes a bigger problem.
In an interview with CNBC, Fed officials said policymakers need to be prepared, as current inflationary pressures are considered 50-50 likely to be temporary. I did
The Federal Reserve Board of Governors will next month begin reducing its asset purchase program by at least $120 billion a month, perhaps with a target date of mid-2022.
Bullard said he would like to see swift action.
“I want to support Taper’s debut in November,” he said in “Closing Bells.” “I advocate for an end to the taper process by the end of the first quarter of next year, as I want to be in a position to tide over the potential upside risks to next year’s inflation as I exit this pandemic. ..”
The Federal Reserve Board says it wants to end the taping before rate hikes begin.
The statement comes on the same day that the International Monetary Fund warned that inflation could last longer than expected. In doing so, the IMF advised the central bank to develop an emergency response plan to strengthen its policies in that matter.
Mr Bullard said he is optimistic that the economy will grow strongly this year, despite joining fellow policymakers to mark the US economic growth outlook for 2021. ..
The Federal Reserve Board stressed that even if it starts to ease this year, it should not be seen as a sign of an impending interest rate hike. Officials believe the Fed has met its inflationary obligation of 2% growth, but said it is still slightly off target of full and broad employment that triggers a rate hike.
“At this point, there is no reason to commit in any way,” Bullard said. “I just want to be in that position if I have to move fast so that I can do that next spring or summer.”
Some more sharp Fed members, who support tougher policies, are questioning the Fed’s story that inflation is temporary. Earlier that day, Federal President Rafael Boustik said he did not want his office staff to use the term, preferring instead “episode” to describe the current situation. Rice field.
Bullard also cast doubt on the theory that inflation is driven primarily by supply chain problems.
“Supply shocks alone cannot lead to inflation,” he said. “These two things lead to inflation, because we are responding to supply shocks with very simple monetary policy.”
Still, he said he thinks the US economy is in good shape and doesn’t think he’s seeing a 1970s-style recession or inflation with negative growth.
“At this point, the chances of a recession are very slim,” he said.
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