St. Louis Fed President James Bullard said yesterday that FOMC aggressive actions in 2022 and planned rate hike in 2023 has “returned inflation expectations to a level consistent with the Fed’s 2% inflation target.”
“During 2023, actual inflation will likely follow inflation expectations to a lower level as the real economy normalizes,” he said.
“The policy rate is not yet in a zone that may be considered sufficiently restrictive, but it is getting closer,” he added.
Regarding the economy, Bullard noted, “The probability of a soft landing has increased compared to where it was in the fall of 2022, where it was looking more questionable… And the reason I think that the prospects for a soft landing have increased is that the labor market has not weakened the way many had predicted” and growth levels rebounded from weakness”.
