The rate-setting Federal Open Market Committee “has taken aggressive action during 2022, with ongoing increases in the policy rate planned for 2023, and this has returned inflation expectations to a level consistent with the Fed’s 2% inflation target,” Bullard said in material prepared for a presentation before a meeting held by the CFA Society St. Louis. “During 2023, actual inflation will likely follow inflation expectations to a lower level as the real economy normalizes,” he said.

Bullard did not connect that outlook to specific guidance on rate changes. Bullard held a voting role on the FOMC during 2022, in a year marked by the central bank’s historically aggressive campaign to lift rates to lower some of the highest levels of inflation seen in decades.

That saw the central bank take its overnight short-term rate target from near zero levels in March to the current 4.25% to 4.50% range. The Fed last lifted that target in December, going up 50 basis points, and it penciled in a move to 5.1% this year. Officials have said wherever they stop with rates they are likely to stay for a while as they ensure inflation pressures are easing.

Bullard said in his presentation that monetary policy is not yet in a space where it’s holding the economy back but soon will be. That coupled with low inflation expectations “may combine to make 2023 a disinflationary year.”

Bullard also said in his remarks that the economy over the second half of last year improved over a lackluster start to the year. He said it appears U.S. gross domestic product growth is moderating to around its longer-run potential of 2%. Bullard also said the job market remains “strong.”