Fed’s Bullard: Fed policy normalization can move faster than following 2007 to 2009 crisis

St. Louis Federal Reserve President James Bullard was out with some comments this Tuesday, saying that robust expansion will continue through 2022 and it will take time for labor supply issues to iron out.

Additional quotes:

• Fed being a little more aggressive would best ensure longer expansion.
• Sees two rate increases in 2022, calls for the balance sheet to begin declining as soon as bond purchases end.
• Fed showing commitment to higher inflation framework but now risks overachieving with inflation too high for too long.
• Sees inflation remaining at 2.8% through next year, at the high end of recent projections.
• At this point would take a very large shock to throw off the start of the bond taper.
• Fed policy normalization can move faster than following the 2007 to 2009 crisis, given the speed of recovery.

Market reaction:

The comments remained supportive of the strong bid tone surrounding the US dollar, which was last seen hovering near one-month tops ahead of Fed Chair Jerome Powell's testimony.