St. Louis Fed President James Bullard, according
to notes of a speech he was to give, expects both core and
headline inflation to rise to 1.6 percent by the end of 2014, up
from around 1 percent now.
"Because inflation surprised to the downside in 2013, it remains
a wildcard for the Committee in 2014," he said of the Fed's
policy-setting Federal Open Market Committee.
While the Fed started this month to reduce its bond-buying
stimulus for the economy, citing a stronger labor market,
surprisingly weak inflation has prompted it to tread cautiously.
Bullard, who backed last month's decision to cut the
quantitative easing program (QE), also predicted the
unemployment rate would drop to about 6.2 percent by year end,
and a pick up in gross domestic product growth to 3.2 percent.
U.S. joblessness fell to 6.7 percent, from 7 percent, in
December according to fresh data published earlier on Friday.
But job growth was far less than expected, which could leave the
Fed second-guessing just how strong is the labor market
(Reporting by Jonathan Spicer;
editing by Chizu Nomiyama)
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