- US remains in a position to see disinflation in 2023, will see if Fed needs to react more or not
- Expects Fed will be dealing more with the strong economy into the spring and summer months and not worrying as much about financial stresses
- Could be downside if financial stress gets worse and would react to that
- Wide variety of jobs data pointing to continued strong labor market
- In most likely scenario, Fed will have to 'ratchet up' more as financial stress abates and economy remains strong
- Sees 80% chance financial stress abates and discussion shifts back to inflation; a lower-probability outcome is recession
- Probability of global crisis from recent stress is low
I agree with Bullard here, which is an uncomfortable position.
As for him, he's not exactly pounding the table for rate hikes, which is a departure for him. It's more of a wait-and-see attitude, which is fair.
