Fed Hawk Bullard Repeats View of Hiking Sooner Rather than Later

Falling unemployment and an improving U.S. economy are evidence that the Federal Reserve should start raising interest rates, a top Fed official said on Wednesday, citing risks of asset bubbles if the central bank keeps rates too low for too long.

“A risk of remaining at the zero lower bound too long is that a significant asset market bubble will develop,” St. Louis Federal Reserve Bank President James Bullard said in prepared remarks.

Bullard, a policy hawk who has long called for the Fed to begin hiking rates, repeated his view that the Fed should not wait to raise short-term borrowing costs.

“Now may be a good time to begin normalizing U.S. monetary policy so that it is set appropriately for an improving economy over the next two years,” Bullard said in remarks delivered at the annual Hyman Minsky conference. He added that “even with some normalization, monetary policy will remain exceptionally accommodative.”

Bullard, who is not a voting member on the Fed’s policy-setting committee this year, said the U.S. economy is likely to maintain a growth rate near 3 percent over the medium term.

via Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.