Prices as Bullard begins his interview:
- S&P index -83.5 points or -2.14% at 3817.01
- NASDAQ index -329 points or -2.88% at 11060
- 2 year yield, 2.562%
- 10 year yield, 2.783%
- I agree that 50 basis points is a good plan for now
- market repricing is partly due to Fed, partly due to prices before the downturn
- Wants to get the rate to 3.5% by the end of the year
- The faster you get rates higher and get inflation expectations under control, the more room we have to lower rates
- Can see lowering rates in 2023 or 2024 if we get inflation under control
- I don't see stagflation as a scenario. Don't see 1970s style market with recession and higher inflation.
- It seems we have a very good economy
- The economy should slow down but it should still be above trend during 2022.
- I don't see anything stopping unemployment going below 3% this year
- We will need higher interest rates to keep inflation under control
- See growth faster in the 2nd half of the year.
- Sees US growth of 2.5% or 3% this year above potential rate of 1.75% to 2.0%.
- We have a 2nd reopening going on with people getting used to getting out of the pandemic. People are getting out and about and that will lead to strong consumption this year
- Don't see a recession this year
- Don't see a recession next year, not my base case
- Recessions come because of some really bid shock. There can be some, but I don't see a really big shock.
- We want to see all the measures of inflation moving in the same direction. Unfortunately that is to the upside now.
- Inflation is very tough on low and medium income households and on renters
- Some businesses are going to get punched in the face as consumers substitute basic necessities for luxuries
- I think this disinflationary pressures will come through the product cycle as companies become afraid of raising prices.
- Corporations think of better ways to increase productivity and lower costs
- Quantitative tightening is an important part of our policy
- We have that teed up to start June 1
- It is not just the US that is pursuing this policy. It is all central banks around the world
- All things equal, QT should put pressure to the upside on rates. Him him
Summary: Bullard stayed away from the idea of raising more than 50 basis points, Although he stuck to the 3.5% end of year Fed funds target. He also sees growth remaining strong at 2.5% – 3% this year with unemployment perhaps moving below 3% by the end of the year. As a result, he does not see a recession and even said that he does not see a recession next year as his best case. Him him
Values at the end of the interview show:
- S&P index -90.38 points or -2.32% at 3810.40
- NASDAQ index -352.25 points or -3.09% at 11036.25
- 2 year yield 2.558%
- 10 year yield 2.71%