James Bullard, President of the St. Louis Federal Reserve, acknowledged the advancement of the economy but said it was still not time to get politics back on track.
In an interview on CNBC’s “Closing Bell,” the central bank official said fiscal and monetary aid, as well as aggressive vaccination efforts, have helped sustain growth since the Covid-19 pandemic began in March 2020.
But he added that despite rising inflation, the Fed should remain accommodative in its policy stance until there are clearer signs that the virus is no longer a major threat. That includes keeping short-term lending rates anchored near zero and continuing to buy at least $ 120 billion a month, even as markets wonder when the Fed will withdraw those purchases.
“I think it’s too early to talk about taper here,” Bullard told Closing Bell, using the notion of market, when the pace of buying will slow down. “We’ll be the chairman[Jerome Powell]open this discussion if he deems it appropriate. “[JeromePowell}openthatdiscussionwhenhethinksit’sappropriate”[JeromePowell}openthatdiscussionwhenhethinksit’sappropriate”
So far, Powell, Bullard, and virtually every other Fed policy maker have spoken together about keeping ultra-light policies intact.
The Fed’s goal is to bring the economy back to full and inclusive employment and has pledged not to raise interest rates preventively, even if inflation surpasses the central bank’s 2% target.
Earlier in the day, investor Stanley Druckermiller harshly criticized the Fed for keeping policies too loose during the recovery, saying the central bank was risking the dollar’s global reputation as the primary reserve currency.
Bullard said the response is appropriate and continues to be how the pandemic is affecting the economy.
“I don’t know how many pandemics Stan experienced. These don’t happen that often,” Bullard said.
“We’re not quite out of the pandemic yet,” he added. “Once we’re out of the pandemic, I think it will be time to see if monetary policy can change.”
Before Bullard started tightening policies, he said he needed to see more signs that the virus is losing its hold.
“I want to get out of the pandemic more firmly than today,” he said. “So, I would love to see those metrics, daily deaths and confirmed cases even lower than where they are. I want the CDC to come out and tell us they are more comfortable than they are before.”
“So we’ll see if we can get to that point, but I don’t think you really want to change the guidelines while you’re still in the pandemic tunnel. Even though you can see the end of the tunnel, we’re not there yet and have to push hard until we reach the end. “
Bullard echoed comments from other Fed officials that inflation is likely to rise this year, but only temporarily. On the labor front, he said the hiring looked good but it was too early to expect a full recovery.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign up today to start a free trial.
