Dallas Fed President Robert Kaplan expected inflation to decline in the fall, but may remain elevated by year-end. He added that Fed will continue to monitor inflation closely, as the economy works through imbalances caused by the pandemic.

Meanwhile, he expects GDP to grow by 6.4% this year, while unemployment rate will fall to 4% by year end.

Kaplan also reiterated that it’s possible for Fed to raise interest rates before the end of 2022. “I haven’t seen anything from that point to today that’s changed my view,” he added.

St. Louis Fed President James Bullard said in a presentation that the US economy is “poised to surpass the previous peak” in the current quarter. The US is “moving into the expansion phase of the business cycle”.

“Market-based inflation expectations have recovered from the lows reached during March 2020,” he added, likely encouraged by Fed’s new policy framework.

“TIPS-based breakeven inflation, based on CPI inflation measures, could move higher and still be consistent with a PCE inflation outcome modestly above the 2% target,” he said. “This would be a welcome development for the FOMC, as inflation has generally been below target for many years.”

Full presentation here.

Fed Governor Christopher Waller delivered his “two messages” in a speech yesterday. Firstly, “despite an unexpectedly weak jobs report, the U.S. economy is hitting the gas and continuing to make a very strong recovery from the severe COVID-19 recession.”

Secondly, “despite the unexpectedly high CPI inflation report yesterday, the factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery.”

Waller continued to “expect the FOMC to maintain an accommodative policy for some time”. He added, “we need to see several more months of data before we get a clear picture of whether we have made substantial progress towards our dual mandate goals. ”

Full speech here.