October 15, 2021

Will Rising Inflation Affect 'Tapering'? This is the Fed Bullard's explanation!

 President St. Louis Fed’s James Bullard on Thursday warned investors that high levels of inflation at this point may not be likely to subside as quickly as expected. This was voiced by a number of policy makers. Bullard at the same time also urged the central bank to continue the tapering program as planned.

Bullar personally sees that the probability of inflation will continue for a period of time with a probability of 50%.

The Fed has signaled in the minutes of their meeting that they can start easing the economic stimulus given when the pandemic crisis begins in mid -November despite rising concerns over inflation, and says a reduction in its bond -buying program will last until mid -next year.

Bullard was one of the strongest supporters among policymakers calling for speeding up the tapering program by the Fed implemented at the start of the Covid-19 pandemic as a measure to stabilize financial markets and keep borrowing costs low.

Bullard also said he wants to finish tapering as early as the first quarter of 2022 as this will allow the central bank to raise interest rates faster than expected if inflation remains high.