Fed's Bullard Says No Need to Raise Rates Again -- Update

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02/08/2019 | 03:31 am


By Michael S. Derby



St. Louis Fed leader James Bullard again said Thursday the central bank doesn't need to raise rates any further to achieve its job and inflation goals.



"Through its normalization program, the [Federal Open Market Committee] has already been sufficiently pre-emptive over the last two years to contain upside inflation risk," Mr. Bullard said in a presentation prepared for an audience in St. Cloud, Minn.



Mr. Bullard, a voting member of the FOMC this year, has been one of the Fed's biggest opponents of rate rises since 2016. For most of that time he has fought a lonely battle, but that changed at the start of this year.



At the Federal Reserve meeting last week, officials refrained from raising rates and said they need to take stock of the economy's performance as storm clouds form over the global economy. A lack of inflationary pressures also gives them space to hold off on further increases.



Mr. Bullard has long argued that low inflation means the Fed doesn't need to raise rates, even with a strong job market. Now, many of his colleagues agree with that position, and it isn't clear the Fed will lift rates again.



Speaking with reporters after his speech, Mr. Bullard said "I'm pretty happy with where rates are today" even though he thinks there is a decent chance monetary policy is in a position where it is holding back growth slightly.



In his speech, Mr. Bullard again said market signals are pointing to caution and argue against rate rises.



"Market-based signals such as low market-based inflation expectations and a threatening yield curve inversion suggest that the FOMC needs to tread carefully going forward," he said.



Speaking with reporters, Mr. Bullard said he believes it is time for the Fed to revisit its monetary policy "dot plots," which chart officials' expectations for the future path of interest rates. That chart has only existed in a time of rate rises and with the path of policy now less certain, some official want changes.



Mr. Bullard said the dot plots have at times been received as conveying more certainty about the rate outlook than actually exists. "That is causing the Committee problems," Mr. Bullard said, adding "I'd very much like to revisit this issue" with other Fed officials.



Write to Michael S. Derby at michael.derby@wsj.com





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