Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Fed’s Bullard Sees Inflation Risks as Americans Adjust to Prices

EconomyOct 04, 2021 12:45PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Fed’s Bullard Sees Inflation Risks as Americans Adjust to Prices

(Bloomberg) -- Surging inflation this year could be creating a new pricing psychology where both businesses and consumers are getting used to rising prices, Federal Reserve Bank of St. Louis President James Bullard said, creating risks in 2022.

“I am concerned about the changing mentality I would say around prices in the economy and the relative freedom that businesses feel that they can just pass on increased costs easily to their customers,” Bullard said Monday during a virtual panel discussion hosted by the International Economic Forum of the Americas.

“For years this has not been the case in the U.S.,” Bullard said. “They felt like if they raised prices, they would lose market share. It would hurt their business. And consumers were rabid about moving to the lower-cost places, low-cost products. That may be breaking down.” 

Inflation measured by the Fed’s preferred index rose 3.6% in August excluding volatile food and energy prices. Bullard predicted that on that core basis, 2022 inflation would be 2.8%, well above the Fed’s 2% target. By contrast, the policy making Federal Open Market Committee’s median participant predicted 2.3% for next year, according to their September forecasts.

“This is a great debate, an important debate about how to handle this going forward,” Bullard said. “I am concerned that the risks are to the upside, that we will continue to get higher than anticipated inflation and that this higher inflation will persist into 2022. It will dissipate somewhat but not down to where we would like it to be in 2022.”

Bullard, who does not have a vote on monetary policy this year, has recently been among the more hawkish policy makers at the U.S. central bank. 

He’s argued the FOMC should start to scale back its bond buying soon and complete the tapering by March 2022. That timetable, faster than others have suggested, would give the Fed the flexibility to raise interest rates earlier than expected if necessary to counter rising prices, he has argued. 

Fed Chair Jerome Powell, speaking to reporters Sept. 22 following a meeting of the FOMC, said the central bank could begin to taper its $120 billion in monthly asset purchases as soon as November and end the process by mid-2022.

©2021 Bloomberg L.P.

 

Fed’s Bullard Sees Inflation Risks as Americans Adjust to Prices
 

Related Articles

Four ways to navigate the holiday tipping vortex
Four ways to navigate the holiday tipping vortex By Reuters - Dec 08, 2021

By Chris Taylor NEW YORK (Reuters) - When it comes to holiday tipping, is America a nation of Scrooges? That is what Ted Rossman wondered. When CreditCards.com recently polled...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
AA King
AA King Oct 04, 2021 1:20PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
not until the public complain about rising prices and it's politically unpalatable will they raise rate
AA King
AA King Oct 04, 2021 1:18PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
this is exactly what the fed and use gov need and want high inflation to get gid of the dept trap. I doubt they will tap as fast as suggested
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email