12 Feb 2014
Fed's Bullard calls for dropping monetary policy thresholds
FXStreet (Łódź) - St. Louis Fed President James Bullard said on Wednesday at the New York Stock Exchange that the surprisingly rapid drop in the US unemployment rate to 6.6% last month should prompt the FOMC to return to a more “traditional” monetary policy strategy soon.
The US jobless rate has now almost hit the 6.5% target, set by the central bank as a threshold for when they could begin considering a rate hike. Therefore, Bullard suggested that the FOMC should modify its forward guidance and "make more qualitative judgments" about their monetary policy, dropping the thresholds.
Furthermore the central banker projected that the US economy will grow by 3% or even more this year, adding that the string of recent unfavorable data hasn't changed the outlook so far. He said that inflation should rise towards the 2% target, but if it stays stubbornly low for a prolonged time, the Fed might have to act.
The US jobless rate has now almost hit the 6.5% target, set by the central bank as a threshold for when they could begin considering a rate hike. Therefore, Bullard suggested that the FOMC should modify its forward guidance and "make more qualitative judgments" about their monetary policy, dropping the thresholds.
Furthermore the central banker projected that the US economy will grow by 3% or even more this year, adding that the string of recent unfavorable data hasn't changed the outlook so far. He said that inflation should rise towards the 2% target, but if it stays stubbornly low for a prolonged time, the Fed might have to act.