It is too early for the Federal Reserve to scale back its $120 billion of monthly asset purchases, St. Louis Fed President James Bullard said Tuesday, in an interview on CNBC .
“I think it is too soon to talk taper here,” he said.
As he has said previously, Bullard said he would defer to Fed Chairman Jerome Powell.
“We’re going to let the chair open that discussion when he thinks it is appropriate,” Bullard said.
So far, Powell has shown no inclination to have that discussion even as the outlook for the economy has steadily improved.
The Fed’s next monetary policy meeting is in mid-June.
The Fed is buying $80 billion per month of Treasurys and $40 billion of asset-backed mortgages, along with keeping its policy interest rates pegged close to zero, to support the economy.
So far, only Dallas Fed President Robert Kaplan has publicly called for the Fed to begin discussing tapering asset purchases, the first step in taking the foot off the monetary gas.
At separate events on Tuesday, Fed Governor Lael Brainard, Cleveland Fed President Loretta Mester, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari and San Francisco Fed President Mary Daly all said it was too soon to begin “talking about talking about” pulling back on asset purchases.
In March, four of the Fed’s 18 top officials said they thought it would be appropriate for the Fed to raise its policy interest rate in 2022.
Bullard said he would like to see the economy “get out of the pandemic more solidly that we are today” before changing Fed policy.
“I don’t think you really want to change policy when you’re in the pandemic tunnel, even though you can sort of see the end of the tunnel,” he said.
In the interview, Bullard said he expects inflation may rise as high as 3% this year. He expects some of that to “hang on” and inflation may only dip to 2.5% in 2022.
Some economists say the inflation rate next year will be key to the outlook for Fed policy.
Bullard said it is encouraging that the Fed may get inflation above 2% over the next two years. The central bank has struggled to hit its 2% annual target since it was adopted in 2012.
Bullard said the weaker-than-expected job report in April shows the economy “is still in the woods a little.”
Bullard said the labor market seems stronger than commonly perceived, noting the unemployment-to-jobs ratio is very low.