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Bullard: Patient Fed Should Mean 'Very Good Couple of Years'

Friday, 01 February 2019 10:40 AM

Federal Reserve Bank of St. Louis President James Bullard applauded the central bank’s shift away from its policy of raising interest rates, saying that should help to ensure a solid U.S. economy for the next two years.

“I think it set us up for a very good couple of years here,” Bullard said in a CNBC television interview Friday. Bullard, a monetary policy voter in 2019, has been the most dovish Fed official over the past two years, arguing the U.S. economy is stuck in a relatively slow growth regime with little inflation, so higher rates are not needed.

He said that he was not suggesting the Fed was committed to standing pat on policy for a specific period of time.

“I think this concept of being on hold -- I would like to think that we’re out of the business of penciling in further increases that have to be made,” he said. “But obviously we will react to data as it comes in. So if the economy performs better than expected or worse than expected going forward, we’re willing to move in either direction.”

The Federal Open Market Committee this week held rates unchanged and dropped its guidance for more gradual rate hikes, replacing it with an explicit reference to being “patient.” Investors took that to mean no rate increase for several months, and interest-rate futures suggest they think a cut is roughly as likely as a hike.

Bullard spoke shortly after Labor Department data showed that U.S. employers added 304,000 new jobs added in January, while average hourly earnings growth increased just 0.1 percent from the month before.

“The feedback from tight labor markets to inflation is extremely weak right now,” he said.

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Federal Reserve Bank of St. Louis President James Bullard applauded the central bank's shift away from its policy of raising interest rates, saying that should help to ensure a solid U.S. economy for the next two years.
bullard, patient, fed, years
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2019-40-01
Friday, 01 February 2019 10:40 AM
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