Overnight we had several Fed speakers on the tapes suggesting they may be supportive of faster tapering and rate rises.
Bostic said he would like to get the Federal Reserve in position to raise its short-term interest rate early next year if inflation pressures don't subside from current levels. To get there, the Fed should accelerate the pace of its tapering, he said. ‘The data, as it has come in over the last several months, suggests that we might, it may be appropriate for us to pull forward a lift off’, Mr. Bostic said, adding, ‘And if that's true, then I think we need to have that optionality by getting the taper taken care of, and finished sooner rather than late’.
Quarles, in his final public appearance before he leaves the central bank, said it was reasonable for the Fed to have held back from removing support for much of the year on the anticipation that inflation was being driven primarily by idiosyncratic price increases related to the reopening of the economy. However, he said it had become clear in recent weeks that this was no longer the base-case scenario, and instead, it was entirely possible that stimulus over the past two years had boosted demand to levels that might even exceed the pre-pandemic trend. ‘This is not a question of demand at pre-Covid levels and supply taking a while to reach back up to that pre-Covid capacity. But rather we have sustained higher demand’, he said.
Barkin also said he would support faster tapering of bond buying saying that he ‘does take seriously actual inflation and its impact. That’s why I’m supportive of normalizing policy as we do it’.
Also Daly added that stronger-than-expected inflation means she supports looking at faster tapering of asset purchases and perhaps even early planning around raising record low interest rates.