WASHINGTON (Reuters) – The combination of easy monetary policy, ample government spending, and a possible economic surge once the pandemic lifts could spark faster-than-expected inflation, St. Louis Federal Reserve President James Bullard said on Thursday.
The Fed in recent years has struggled to lift the pace of price appreciation to its 2% target, but now “you have very powerful fiscal policy in place and perhaps more to come, you have a Fed that has backed away from a preemptive strategy…and wants to temporarily have inflation above target, and you have the economy poised to boom at the end of the pandemic,” Bullard said. “Those things all seem to suggest that the stage is set for higher inflation.”
(Reporting by Howard Schneider; Editing by Andrea Ricci)
