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Bullard: Continued Appropriate Macro-Pru Can Contain Financial Stress

  • St Louis Fed’s Bullard (non-voter) writes in an essay that “continued appropriate macroprudential policy can contain financial stress in the current environment, while appropriate monetary policy can continue to put downward pressure on inflation.”
  • He references the St Louis Fed Financial Stress Index (STFSI) and its relatively low level compared to past flare ups in the pandemic and 2008-09 – chart below.
  • Fed Funds implied rates are holding at similar levels to the start of the session. 11bp hike priced for May, a first cut from current levels with the Sept FOMC (-26.5bps) and just over two cuts from current levels by year-end with -55bps for Dec.

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