Exclusive-Fed’s Bullard: More aggressive Fed stance best to ensure longer expansion

The Federal Reserve should let its roughly $8 trillion balance sheet shrink next year as soon as it winds down a bond purchase program, St. Louis Federal Reserve president James Bullard said, cautioning high inflation may require more aggressive steps by the central bank including two interest rate hikes in 2022. In an interview Bullard said he now expects inflation to remain at 2.8% through next year, well above the central bank’s 2% target and the highest among new economic projections issued by Fed officials last week. While Bullard said he agrees inflation will ease somewhat on its own, he said it will take more central bank effort to ensure that happens smoothly over time, and never requires the sort of restrictive policies that could imperil the current expansion.


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