St. Louis Fed James Bullard said yesterday, “the FOMC could begin increasing the policy rate as early as the March meeting in order to be in a better position to control inflation. Subsequent rate increases during 2022 could be pulled forward or pushed back depending on inflation developments.”
“There was a significant unanticipated inflation shock in the U.S. during 2021,” he said. “With the real economy strong but inflation well above target, U.S. monetary policy has shifted to more directly combat inflation pressure.”
“We could go ahead with balance sheet run off shortly after lifting off the policy rate,” Bullard said, and start reducing support for the economy “sooner rather than later.”
