Fed’s Bullard Sticks to Script, Says Unwise to Keep Hiking Rates

A top Federal Reserve official on Wednesday reiterated his opposition to further interest rate hikes given that U.S. inflation expectations have fallen and threaten the U.S. central bank’s credibility.

“I regard it as unwise to continue a normalization strategy in an environment of declining market-based inflation expectations,” St. Louis Fed President James Bullard said in prepared remarks.

The so-called break-even expected inflation rate in five years’ time has dropped as global markets sold off this year, and investors are now predicting a price measure of less than 1.5 percent. That “represents an erosion of central bank credibility with respect to the inflation target,” Bullard said in remarks for delivery to the Money Marketeers bond traders group here.

Reuters

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam