MNI BRIEF: Bullard Wants Fed Asset Sales If Inflation Too High

St. Louis Fed President James Bullard on Thursday said the Federal Reserve should consider selling longer term assets as a "Plan B" if inflation remains high after the initial phase of rate hikes and QT.

"I'd put that out as a Plan B that we'd pull out later if inflation doesn't dissipate as much as expected," he told a Columbia University and SGH Macro Advisors webcast.

"If we get further along and inflation remains high and does not look to be returning to target at the appropriate speed, then I think we should have a plan for asset sales. And those asset sales could be concentrated more at longer term securities that would presumably put upward pressure on longer term yields in tandem with the upward pressure that increases in the policy rate would put, so you'd maintain a yield curve that's relatively stable, same kind of spreads you'd have today."

He also reiterated his view that the fed funds rate should rise by 100 bps by July with natural runoff of Fed assets starting in the second quarter.