Fed’s Bullard Says Low Rates Will Remain for Two to Three Years

Low interest rates will likely be the norm during the next two to three years, James Bullard, president of the Federal Reserve Bank of St. Louis and a voting member of the Federal Open Market Committee, said in prepared remarks on Monday.

The U.S. is in a low-productivity growth regime, which is pressuring real safe rates of return, he said.

With real safe rates of return exceptionally low and not expected to rise soon, interest rates should be expected to stay exceptionally low during the forecast horizon, he said.

Bullard’s comments come one month after he voted against hiking the federal funds rate. The Fed continues to grapple with deciding when it will increase rates from the current target range of 0.25 to 0.50 percent. The last time the Fed raised rates was in December 2015, when it did so for the first time in nine years.

Fed watchers expect the next increase to come by year end. Fed fund futures show implied odds of nearly 70 percent for a December rate hike, according to the CME Group FedWatch website.

via CNBC

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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