The U.S. economy has slowed since March and inflation has surprised to the downside, St, Louis Fed President James Bullard said Friday, in remarks that raise questions about the need for more interest rate hikes from the U.S. central bank.
Although Fed watchers expected in
March that the Fed would raise rates again in June, “financial market
readings” since then “have moved in the opposite direction,” Bullard
said in a speech at the Olin Business School, Washington University in St. Louis.
This suggests that the Fed’s contemplated policy path of two more
rate hikes this year “is overly aggressive relative to actual incoming
data on U.S. macroeconomic performance,” Bullard said.
not a voting member of the Fed policy committee this year. He has
forecast only one rate hike this year and none in 2018 and 2019.
said he was not worried about inflation increasing substantially even
if the unemployment rate falls meaningfully below its current 4.4% rate.
“Low unemployment readings are probably not an indicators of meaningfully higher inflation over the forecast horizon,” he said.