Read More: Fed Officials See Strong U.S. Rebound, Fanning Talk of Taper
His remarks are the latest from officials on whether the Fed should debate tapering bond purchases later this year, which has caught the attention of investors as the yield curve steepens and rates on 10-year Treasuries push to the highest levels since March.
Bullard welcomed the increase in the spread between short- and long-term debt.
“I would consider it an encouraging sign that the Treasury 10-2 spread is returning to more normal levels for an expansion,” he said. “I think markets are hoping to see the end of the pandemic in 2021. They’re hoping to see good growth going forward, and because of that, you’re seeing the yields normalize. So I think that’s a good outcome.”
The Fed last month signalled interest rates would stay near zero at least through 2023 and pledged to keep buying bonds at a $120 billion monthly pace until “substantial further progress” had been made on its employment and inflation goals.