(Reuters) – St. Louis Federal Reserve Bank James Bullard on Friday called for the Fed to begin tightening monetary policy, citing unexpectedly high inflation, strong economic growth and a labor market that is very tight and poised to strengthen further.
“These considerations suggest that the FOMC at upcoming meetings may want to consider removing accommodation at a faster pace,” Bullard said in remarks prepared for delivery to the Missouri Bankers Association, referring to the Federal Open Market Committee which sets U.S. monetar policy at the Fed.
They were written before the publication of a government report showing weaker-than-expected jobs growth in November.
Bullard has been among the most hawkish of Fed policymakers, urging the central bank to end its bond-buying program by early next year to put the Fed in position to start raising interest rates as early as the spring if needed to contain inflation. The remarks Friday took that a step further,
It is too early to assess the impact of the emergence of the new Omicron variant of COVID-19 on the U.S economy, he said.
Fed policymakers next meet on Dec. 14-15 and will consider speeding the reduction of its bond-buying program, which currently is on track to end by June of next year. Even with the reductions, the Fed is still actively easing monetary policy by buying bonds; interest rates remain near zero where they’ve been since March 2020.
Given the unexpected shock of inflation this year, and despite remaining pandemic risks, Bullard said, “the Federal Open Market Committee (FOMC) should remove monetary policy accommodation.”
(Reporting by Ann Saphir; Editing by Dan Burns and Chizu Nomiyama)
