ICYMI – Fed’s Bullard says balance sheet shrinkage is an option he is open to

James Bullard is President of the St. Louis Fed branch. He said he’s open to “ to allow runoff of the balance sheet at the end of the taper or shortly thereafter“.

Bullard was speaking Tuesday in a virtual appearance with little media coverage. The Wall Street Journal have a piece up on his comments (Journal is gated, link here if you can access it). 

Bullard said again he expects the Fed to raise rates twice in 2022. 

  • “I’m agreeing more with the market that we’ll have to be somewhat more aggressive than we otherwise would have been in order to keep inflation under control,” 
  • “I think there’s a case to be made that inflation is going to be mostly transitory and dissipate, but you can only put so much probability on that scenario,” and it’s more likely that high levels of price pressure will stick around, requiring the Fed to take action to lower inflation
James Bullard is President of the St. Louis Fed branch. He said he's open to " to allow runoff of the balance sheet at the end of the taper or shortly thereafter".

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