St. Louis Fed President James Bullard said in a presentation that the US economy is “poised to surpass the previous peak” in the current quarter. The US is “moving into the expansion phase of the business cycle”.

“Market-based inflation expectations have recovered from the lows reached during March 2020,” he added, likely encouraged by Fed’s new policy framework.

“TIPS-based breakeven inflation, based on CPI inflation measures, could move higher and still be consistent with a PCE inflation outcome modestly above the 2% target,” he said. “This would be a welcome development for the FOMC, as inflation has generally been below target for many years.”

Full presentation here.

Fed Governor Christopher Waller delivered his “two messages” in a speech yesterday. Firstly, “despite an unexpectedly weak jobs report, the U.S. economy is hitting the gas and continuing to make a very strong recovery from the severe COVID-19 recession.”

Secondly, “despite the unexpectedly high CPI inflation report yesterday, the factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery.”

Waller continued to “expect the FOMC to maintain an accommodative policy for some time”. He added, “we need to see several more months of data before we get a clear picture of whether we have made substantial progress towards our dual mandate goals. ”

Full speech here.

Fed Vice Chair Richard Clarida said he expected inflation to “return to – or perhaps run somewhat above – our 2% longer-run goal in 2022 and 2023”. That would actually fit under the new policy framework. Though, he admitted that he was “surprised by higher-than-expected inflation data released today”. Still, “it’s important that pressures to inflation be transitory”.

Clarida also said that “the near-term outlook for the labor market appears to be more uncertain than the outlook for economic activity.” He added, “What this necessary rebalancing of labor supply and demand means for wage and price dynamics will depend importantly on the pace of recovery in labor force participation as well as the extent to which there are post-pandemic mismatches between labor demand and supply in specific sectors of the economy and how long any such imbalances persist.”