St. Louis Fed President James Bullard said on Wednesday that he would want asset tapering to be completed by the first quarter of 2022 to open the option for an interest rate increase if needed, as reported by Reuters.
Additional takeaways
"Firms currently have pricing power and executives seem confident they can pass rising input costs along to consumers."
"Labor markets are as tight as they ever get with more job openings than unemployed."
"Pandemic retirees are not coming back, the Fed does not need to strive to full return of pre-covid employment."
"Economy has clearly adapted to coronavirus, not seeing delta variant stopping the process."
"Seeing Q4-2022 as logical time for initial rate increase given expected ongoing employment gains and strong inflation."
"Expecting Fed to allow balance sheet to run off after taper is complete, allow market pricing to take over in long-term credit markets."
"Taper is mostly priced into markets at this point, details matter only a little at this point."
Market reaction
The US Dollar Index continues to push higher during the American session and was last seen rising 0.14% on the day at 93.26.