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Bullard has said that the current target rate of between 0.5
percent and 0.75 percent is roughly appropriate for an economy
stuck in a low-growth, low-inflation rut.
That situation "has been many years in the making and is
unlikely to turn around quickly," Bullard said in morning
remarks at Washington University in St. Louis. "A relatively low
policy rate will remain appropriate."
Despite administration talk of large tax cuts and infrastructure
spending, actions that could stoke inflation in an economy
considered near full employment, Bullard said inflation
expectations remain low.
"It does not appear that undue inflationary pressure is building
so far," Bullard said.
The Fed raised its policy rate in December, the second such move
in two years. That glacial pace is expected to accelerate this
year. Policymakers are eager to move as far as possible from the
zero lower bound hit during the financial crisis, and the
economy is near the Fed's goals of two percent inflation and
full employment.
But the election of U.S. President Donald Trump has presented
both positive and negative risks. The prospect of a fiscal and
tax push could boost inflation and prompt the Fed to move
faster, but Trump's approach to immigration and trade run
counter to what central bankers feel the economy needs to become
more productive in the long run.
Bullard said it will not be clear how those forces play out
until at least next year.
"Whether the new administration's policies represent a 'regime
shift' depends on whether these policies will have a sustained
impact on productivity," Bullard said.
(Reporting by Howard Schneider; Editing by Meredith Mazzilli)
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