Fed’s Bullard Says Fed Behind on Rate Schedule

The Federal Reserve’s third round of bond buying had a better than expected impact on the U.S. labor market, a Fed official said on Thursday, making it all the more necessary for the central bank to move faster with hiking interest rates.

St. Louis Fed President James Bullard pointed out that the economy has exceeded the economic forecasts the Fed presented in September 2012, when the central bank’s latest bond buying program – known formally as Quantitative Easing (QE) – was launched.

“The policy rate normalization process remains far behind the schedule laid out at the launch of QE3,” Bullard said in prepared remarks for a business event here on Thursday.

Bullard said raising rates in the first quarter of 2015, a forecast he has maintained throughout the year, would already be past what a standard monetary policy rule calls for.

Bullard is not a voting member on the Fed’s policy setting committee. The former central bank staffer said inflation continues to run somewhat below the Fed’s policy setting committee’s target of 2 percent.

Bullard said the committee will have to change its interest rate guidance language at the next meeting.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza