James Bullard, president of the Federal Reserve Bank of St. Louis, said on Friday that the United States is still on track to have deflation in 2023. They will look to see if the Fed needs to do more. He sounded hopeful when he said that he thought the Fed would be focusing more on the strong economy and not as much on financial stresses in the coming months.
Bullard thinks there is a “80% chance” that the stress on the economy will ease and the conversation will turn back to inflation. He says that the other possible outcome, which is less likely, is a recession. He warned that things could go wrong if the financial stress gets worse.
Bullard said that the recent stress is not likely to lead to a global crisis. He said that the Fed will continue to keep a close eye on the situation and will take action if needed.
As a result of the strong economy, the St. Louis Fed President said, the end-of-year rate was raised by 25 basis points to a range of 5% to 5.75%, with the assumption that financial stress will go away.
Bullard said that the projections show that there will be one more rate walk, which could happen at the next FOMC meeting or soon after.
Bullard of the Fed says that a quick response to bank stress lets monetary policy focus on inflation.
Source: Team CurrencyVeda
