Fed should wrap up QE by end of Q1 2022, Bullard says

A top official at the Federal Reserve brushed off concerns about a slowdown in hiring and said the central bank remained set to start tapering its debt purchases before year-end.

He also broached the possible need for rate hikes in 2022, to stave off a potential housing bubble among other considerations.

In an interview with the Financial Times, the president of the Federal Reserve Bank of St. Louis, James Bullard, said: "The big picture is that the taper will get going this year and will end sometime by the first half of next year."

Bullard reportedly said he was looking for US non-farm payrolls to grow by around half a million per month and that "it certainly looks like we'll have a very strong labour market going into next year."

The central banker acknowledged the impact that Delta was having but was said to have stressed the role of other supply-side issues, including enhanced unemployment benefits.

Freeing its hands to raise interest rates in 2022 was another reason for the Fed to wrap up its asset purchases by the end of the first quarter of that year, he said.

Inflation might moderate next year, he argued, but it might not, in part due to the additional supply-side constraints overseas as a result of Delta.

In his judgement, another to reason to wrap up quantitative easing was the "incipient housing bubble".