Market news
18.06.2021, 12:40

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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