MNI: Fed And ECB Soft Landings Are Possible- Bullard

The Federal Reserve and ECB can achieve soft landings if policymakers press ahead with credible inflation-fighting programs, St. Louis Fed President James Bullard said Tuesday, adding that U.S. fiscal authorities also seem on track to pull back stimulus.

Both central banks have advantages today that were absent during the price surges of the 1970s such as a track record of numerical inflation targets, according to slides for a presentation Bullard is giving to the Money Marketeers of New York University.

"The Fed and the ECB have considerable credibility compared with their 1970s counterparts, suggesting that a soft landing is feasible in the U.S. and the EA if the post-pandemic regime shift is executed well," Bullard said in his slides. In another part of the presentation he said the two central banks "may be able to dis-inflate in an orderly manner and achieve a relatively soft landing."

The remarks didn't lay out a detailed view on whether the Fed should hike another half percentage point or 75bps at its next meeting in September, and most comments reviewed literature around inflation expectations and monetary policy credibility. In the U.S., Bullard noted signs of slower deficit spending are coming alongside higher interest rates.

"The regime shift back to the pre-pandemic monetary-fiscal mix does appear to be taking shape in the U.S.," he said.