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Bullard said on Wednesday he did not put much weight on whether
the central bank acts in September or even at all this year,
given that he now thinks a single hike is all that is needed to
maintain unemployment and inflation rates near the Fed's target
levels.
"It does not matter much when we move," Bullard said, though he
would prefer it come after "good news" such as evidence economic
growth is rebounding.
"I think you would want to see at least a modest rebound in
growth or be confident that one was coming," he told reporters
after speaking at an asset management conference at the
Washington University in St. Louis.
Bullard's colleagues this week appeared to set the stage for a
September hike. Fed minutes from the central bank's July
meeting, released on Wednesday, showed policymakers split on the
timing for the next move. That would be the second rate hike in
the Fed's agonizingly slow process of "normalizing" rates
following the 2007 to 2009 financial crisis.
The Fed's struggle to follow through on its normalization plan,
Bullard feels, has confused markets and prompted him to lay out
a new framework for analyzing policy - one that accepts the
current low-growth, low-inflation economy as a durable state of
affairs.
In a presentation to the conference, he said there was no reason
yet to conclude the U.S. had yet shifted from the low-growth,
low-inflation "regime" that makes low rates appropriate for what
he has termed the "foreseeable future" - perhaps two and a half
years. Until such a regime change occurs, Bullard has said he
feels there is no reason to raise key interest rates more than
once, to 63 basis points, one quarter-point increase above their
current level.
"Risks associated with this projected policy rate are likely to
the upside," Bullard said in his prepared remarks. But until
risks shift the U.S. to a new path, he said there is no reason
to think rates should move much higher.
(Reporting by Howard Schneider, Editing by Chizu Nomiyama)
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