Start tapering in November; end of tapering in the first quarter of 2022; first rate hike on fed funds in the spring or summer of 2022. It is the monetary policy recipe that James Bullard, president of the Federal Reserve in St. Louis, who has always been one of the most hawkish exponents of the US central bank, presented, during an interview with Cnbc.
Bullard said he believed in an improvement in the health situation, as against Covid-19 there will be further weapons, such as third doses of vaccines, drugs for the treatment of the disease, vaccines even for the little ones.
In his opinion, the US economy is also in good condition despite the appearance of the Delta variant during the third quarter of the year. Still, for Bullard the unemployment rate could return to pre-pandemic levels by next spring.
Regarding inflation, however, although it is “reasonable” to think that it will go down on its own, “there is also some risk that it will strengthen further”.
Finally, the likelihood of a recession occurring in the US is “exceptionally low at the moment” for him.