- St. Louis Fed chief cites declining inflation expectations
- Asset-price bubbles are not a concern in crisis, he adds
Federal Reserve Bank of St Louis President. James Bullard said the recent turmoil in financial markets and a further fall in expectations for inflation gave investors the scope of the central bank to delay raising interest rates.
"I consider it unwise to continue normalization strategy in an environment of falling inflation expectations based on the market," Bullard, who votes on the Federal Open Market Committee of the settlement policy this year said in a speech Wednesday in St. Louis.
Bullard supported FOMC's decision to keep interest rates unchanged last month after raising them six weeks earlier for the first time in nearly a decade. Many Fed officials saw the risks to the outlook increasingly amid global economic slowdown and market turmoil, according to minutes released earlier Wednesday.
Chief St. Louis Fed said the normalization of interest rates was designed in part to address the concern about the bubbles in asset prices, which have become less of a problem with a recent tightening financial conditions.
"The recent downturn in global stock markets and rising risk premia on corporate bond markets, may have made it less likely medium-term concern," he said .
"changes These dependent data probably give the FOMC more leeway in its standardization program," said Bullard.
in response to questions from the audience after his speech, Bullard said the US economy is "close distance" to require a negative interest rate policy, as the Bank of Japan and European Central Bank. "the outlook for the US is reasonably good. We are more or less on track with the standardization program "even though" it may take longer. "
The median projection of FOMC members submitted to the December meeting called for four quarters of a point increase in 2016. In his remarks, Bullard said communication path of politics in this way" could be considered a commitment based on the calendar inadvertently raise rates. "
" we should perhaps out of how many walks we should do in a year, "he told reporters after his presentation. "You want to spend some good news on the US economy, relatively good economic growth, a further improvement in the labor market, confidence that inflation is back to the path."
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