Central Banks

Monday, July 20, 2015 - 09:41

St Louis Fed's Bullard: Chance of Sept Liftoff Better Than 50%


WASHINGTON (MNI) - St. Louis Federal Reserve Bank President James Bullard said Monday that while next week may be too soon for the Fed to raise interest rates, the chance of the Federal Open Market Committee lifting rates off zero at its September meeting were above 50%.

"Next week might be a little early," Bullard, in an interview on the Fox Business Network. "I think we will use that meeting to assess the data. We have tried to be data dependent here."

But, he added, "I'd see September having more than a 50% probability right now."

The committee meets July 28-29 and then again September 16-17 when it will update its economic projections and Fed Chair Janet Yellen has a scheduled press conference.

While Yellen has said every meeting is a live one, and she could call a press conference to explain a decision to raise rates, markets have largely focused on the September and December meetings.

Bullard called it "prudent" for the short term policy rate to be off zero, where they have been for almost seven years, and "then take it meeting by meeting from there."

He added: "This is a situation where we have to start thinking ahead more about where we're going to be two years from now."

Bullard also said the zero rates were an emergency measure, despite the economy not being in emergency mode. "We've got unemployment very close to the natural rate," he said. "Inflation is a little low, but probably come back up to targets."

Bullard said he expects 3% growth for the remainder of the year, and he doesn't expect international events, including Greece and China, to "hurt" growth here.

Asked about legislation altering the Fed's structure and oversight, Bullard said he was concerned about making the New York Federal Reserve Bank president position a political appointment.

"I think that would politicize the Fed much more than it already is and I think the appointment process, as you know, is not working well," he said, adding there are a lot of hold ups and open positions. "I don't think you want to do that with the New York Fed job," he said.

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