Fed's Bullard says policy is at proper place - MarketWatch

Fed's Bullard says policy is at proper place - MarketWatch

WASHINGTON (MarketWatch)-- Monetary policy is appropriately ultra-easy given the macroeconomic situation, said James Bullard, the president of the St. Louis Federal Reserve Bank on Friday. In a speech on the outlook to a business group in Little Rock, Ark., Bullard said the Fed could respond "to a significant deterioration" to the economy. But he said the Fed "may be trying to do too much with monetary policy," risking monetary instability in the U.S. and around the world. The near-zero rate policy has been in place for more than three years and is projected for several more, he noted. This is far beyond the typical recession and recovery discussed in academic literature, he said. While the policy has been appropriate so far, it could "reignite a 1970s-type experience globally" if pursued too aggressively, Bullard said. This era included four recessions in 13 years, double-digit inflation and double-digit unemployment. The lesson is clear, he said: "Do not let the inflation genie out of the bottle." Bullard said labor market policies would be better than Fed rate policy to bring down unemployment.