Fed’s Bullard says 2023 could be year when rising inflation slows

The head of the Federal Reserve of St. Louis, James Bullard, said on Thursday (5) that the new year may finally bring some welcome relief from inflation.

The Federal Open Market Committee, which sets borrowing costs, “took aggressive action during 2022, with continued increases in the benchmark rate planned for 2023, and this has returned expectations about the jump in prices to a level consistent with the target 2% inflation rate from the Fed,” Bullard said in a presentation at a meeting held by the CFA Society of St. Louis.

“During 2023, actual inflation will likely follow inflation expectations to a lower level as the real economy normalizes,” he said.

Bullard said in his presentation that monetary policy is not yet in a space where it would hold back the US economy, but soon will be. That, along with low inflation expectations, “could combine to make 2023 a disinflationary year.”

Bullard also said in his remarks that the economy in the second half of last year had improved from a lackluster start to the year. He said US Gross Domestic Product growth appears to be moderating to near its long-term potential of 2%. Bullard also said the job market remains “strong”.

Source: CNN Brasil

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