In an FT interview, St Louis Fed President James Bullard maintained the view that “the big picture is that the taper will get going this year and will end sometime by the first half of next year.”

The weak August NFP report didn’t alter his view on job market recovery. “There is plenty of demand for workers and there are more job openings than there are unemployed workers”, he said. “If we can get the workers matched up and bring the pandemic under better control, it certainly looks like we’ll have a very strong labour market going into next year.”

He also said there is “also a case” that inflation wont moderate into 2022, and may go higher, due to ” additional supply constraints coming from international sources now because of the Delta variant.”

Fed Chair Jerome Powell downplayed the significance of recent labor market and inflation data that surpassed expectations, he noted that these developments do not significantly alter the Fed’s overall economic outlook.

“Recent readings on both job gains and inflation have come in higher than expected,” Powell said at a forum at Stanford University overnight. However, he was quick to clarify that these developments do not fundamentally shift the broader economic narrative, which he described as “one of solid growth, a strong but rebalancing labor market, and inflation moving down toward 2 percent on a sometimes bumpy path.”

In discussing the Federal Reserve’s approach to monetary policy easing, Powell affirmed the “meeting by meeting” decision-making process and acknowledged that rate cuts are “likely to be appropriate at some point this year.”

Yet, he stressed the prerequisite of having “greater confidence” in inflation’s downward path towards 2% target before any interest rate red reduction would be considered.

“Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy,” he remarked.

San Francisco Fed President Mary Daly said yesterday that ” an expeditious march to neutral by the end of the year as a prudent path.” And it’s the “top priority” to move “purposefully to a more neutral stance that does not stimulate the economy”

“The case for a 50 basis-point adjustment is now complete,” she said after the speech. “The economy is resilient; it can handle these adjustments.” And, she’s “busy thinking about are three things: inflation, inflation, inflation.”

Nevertheless she also emphasized, ,”if we ease on the brakes by methodically removing accommodation and regularly assessing how much more is needed, we have a good chance of transitioning smoothly and gliding the economy to its long-run sustainable path,” she said.

As for the economy, she said, recession is one word, but it describes a whole range of outcomes. It can be a couple of quarters of a tiny bit below zero. That’s a very different beast than something like the financial crisis or the Volcker disinflation period.”

“That’s not something that I’m forecasting or something I think would derail the long-run expansion,” she added.

Fed Governor Christopher Waller said yesterday, “we need to move to a much more restrictive setting” and do that “as quickly as possible.”

“I’m definitely in support of doing another 75 basis point hike in July, probably 50 in September, and then after that we can debate whether to go back down to 25s,” he added.

“Inflation is a tax on economic activity, and the higher the tax the more it suppresses economic activity,” Waller warned. “If we don’t get inflation under control, inflation on its own can place us in a really bad economic outcome down the road.”