Fed’s Bullard downplays recession risk on US level

Speedy US rate hikes raised the risk of recession, but it is likely to be caused by an outside shock rather than from the collapse of the American economy that remains robust according to statements by St. Louis Fed president James Bullard.

Bullard said, at an economic forum in London, that the path adopted by the Fed is trying to walk between controlling US inflation without triggering a serious downturn.

Strong US job growth and strong household balance sheets would make “talk about the recession story more a global issue not a US concern, according to Bullard, with the possibility of Europe and China pulling the rest of the world into a downturn.

Bullard, who has been among the most hawkish Fed policymakers in encouraging faster and larger rate increases, said he now thinks Fed plans to raise the target policy rate to around 4.5% by the end of 2022 has pushed US monetary policy to a “restrictive” level that will slow the economy and ease inflation.