Uncertainty over the inflation outlook “is as high as it has ever been since 1980,” St. Louis Federal Reserve Bank president James Bullard said in an interview published Sunday.
While there is still a lingering threat of deflation in the United States, Bullard said, that could change quickly into a threat of excess inflation.
“I think there’s still some risk of deflation, but I do think the deflation risk is fading as the economy recovers,” Bullard told the Financial Times.
The bigger risk is in the medium term, with inflation “possibly substantially above target over a horizon of two to four years,” he said, attributing this to a combination of very large U.S. budget deficits with very easy monetary policy.
— Market News International
