Fed's Bullard: Markets are already pricing in that a taper is going to happen

In an interview with Bloomberg TV on Friday, St. Louis Fed President James Bullard said that markets are already pricing in that a taper is going to happen, per Reuters.

Additional takeaways

"Fed is fine if inflation moderates quickly but may need to put downward pressure on inflation if it lasts longer."

"You have to think about where the labor market will be at the end of the taper."

"You could argue this is one of the tightest job markets we've seen in recent decades."

"Fed needs to have optionality in case inflation doesn't moderate."

"It's possible we're moving into a high productivity growth regime that could lead to higher interest rates than we otherwise would have seen."

"We're coming out of the pandemic with a very strong economy."

"Asset purchases are not helping economy that much right now and could be contributing to higher housing prices."

Market reaction

The US Dollar Index (DXY) is edging lower as focus shifts to FOMC Chairman Jerome Powell's speech at the Jackson Hole Symposium. As of writing, the DXY was down 0.1% on the day at 92.94.