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In accordance with the Fed's Bullard, the "largest quarter of progress ever" will enhance inflation

James Bullard

Olivia Michael | CNBC

James Bullard, president of the St. Louis Federal Reserve, was optimistic about the US economy, with "off-chart" growth helping to boost inflation.

Bullard also said he saw the unemployment rate drop to 6.5% by the end of the year, an estimate well below the median forecast of 7.6% his fellow Fed colleagues released earlier this week. Unemployment stood at 8.4% in August, compared to the pandemic peak of 14.7%.

"This is the biggest growth quarter of all time in the US," he said on Friday during a moderated discussion with the Boeing Center for Supply Chain Innovation. "At an annual rate, it looks like 30%. Insane number, far off the charts compared to anything we're used to in post-war US macroeconomic history."

That growth, Bullard added, will help the Fed meet its 2% inflation mandate.

Following the Federal Open Market Committee meeting this week, officials released a statement expressing their commitment to a target the central bank has missed since setting the target in 2012.

As part of the initiative, the Fed has pledged not to raise interest rates until inflation surpasses 2%, even if unemployment falls to levels normally associated with price pressures.

"I think it's going to be pretty successful," said Bullard. "I actually think we are at a moment where you may see some inflation from various sources in the future."

He cited "less preventive measures by central banks" and the large government budget deficits, which are often associated with inflation and economic growth that "does not happen every day."

U.S. gross domestic product contracted 31.7% on an annualized basis in the second quarter, driven by unprecedented economic shutdowns to slow the coronavirus pandemic. The Atlanta Federal Reserve's GDPNow tracker shows the potential for a 32% growth rate in the third quarter.

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