The Fed’s Bullard says now is the time to cut back on the stimulus; Bitcoin not moved

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The US economy is poised for a gradual unwinding of the central bank’s bond buying program to increase liquidity launched a year ago, according to Federal Reserve Bank of St. Louis chairman James Bullard.

“I think that with an economic growth of 7% and the [coronavirus] As the pandemic gets better and better under control, I think the time has come to withdraw the emergency measures, ”Bullard told The Wall Street Journal in an interview on Monday, adding that further purchases risked overheating the housing market. “I’m a little worried that this is fueling a burgeoning real estate bubble,” he said.

The Federal Reserve has been buying bonds worth $ 120 billion a month since financial markets collapsed in March 2020 over fears of a coronavirus-induced recession. The unprecedented stimulus triggered risk-taking in all corners of the global financial market, including bitcoin. The major cryptocurrency registered a six-fold rally to over $ 60,000 from October 2020 to April 2021.

Typing talk is therefore considered bearish for the cryptocurrency. However, bitcoin is barely moving on Bullard’s comments, released by the WSJ minutes before press time, and continues to trade silently at close to $ 33,200.

The policymaker has made similar comments in recent weeks, saying the impending stimulus unfolding may not be on autopilot like the reduction exercise conducted in 2014.

While the policymaker on Monday revealed his taper bias, he assured that the central bank would be very cautious while withdrawing the stimulus. “We want to do it slowly and carefully, but I think we were in a very good position to start a tap. I don’t need to start tomorrow, but I think I was in very good shape for this once the collective members of the Federal Open Market (Rate Setting) Committee are ready to act, ”said Bullard.

The Fed surprised markets last month by unexpectedly pushing the timing of the first interest rate hike to 2023. While the central bank maintained that the recent rise in inflation may be transient, economists polled by the WSJ expect prices to remain stable on the upside. for a while.

The US Consumer Price Index (CPI) report for June is due for release on Tuesday. The data is expected to show the cost of living rose 4.9% year-on-year in June, after rising 5% in May, according to FXStreet. A sharp drop in expectations could reinforce fears of typing by exerting downward pressure on liquidity-hungry financial markets.

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