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Fed President Sees Possibility of Soft Landing

James Bullard, the President of the St. Louis Federal Reserve, expressed his confidence that the central bank's interest-rate increases would not lead to a recession.

James Bullard, President of the St. Louis Federal Reserve
James Bullard, President of the St. Louis Federal Reserve

Bullard's Optimism on Soft Landing

Speaking at a conference at Columbia University in New York, Bullard stated that a "soft landing is feasible in the U.S. if the post-pandemic regime shift is executed well." He shared a similar level of optimism earlier this year.

Credibility of Modern Central Banks

Bullard's confidence is based on the Federal Reserve's "considerable institutional credibility" compared to the era of former Fed chairman Paul Volcker. According to Bullard, modern central banks have more credibility than their 1970s counterparts.

Inflation and Recessions in the 80s

In the early 1980s, the peak of inflation as measured by the consumer price index ran above 14%, and the U.S. economy was in back-to-back recessions in 1980 and 1981-82. However, few believed that the Fed was serious about reducing inflation at the time.

Bullard is Not a Voting Member

It's worth noting that Bullard is not a voting member of the Fed's rate-setting committee this year.