Federal Reserve Could Start Tightening Credit Before End Of This Year, Official Says
The Federal Reserve is not likely to tighten monetary policy soon after ending its easy money policy in June, but it could start taking steps before the year is over, said Federal Reserve Bank of St. Louis President James Bullard.
In an interview, Bullard said a strong economy and rising inflation could lead the Fed to begin shrinking its balance sheet by no longer reinvesting new cash.
“We’ve got to start taking some steps to start to tighten monetary policy as we continue on through 2011 to make sure we don’t allow inflation to get away from us,” he told the Wall Street Journal.
The Fed would likely consider raising interest rates only after shrinking its balance sheet, he said.