Fed’s Bullard questions need for June rate hike

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.
Bullard is 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.
Bullard 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.