St. Louis Fed President James Bullard said he argued against last week’s decision by the U.S. Federal Reserve to hold interest rates steady
Bullard does not currently vote on the Fed’s policy setting committee and thus could not join Richmond Fed chief Jeffrey Lacker in dissenting from the decision to hold rates near zero for at least another six weeks.
“The Committee has not, in my view, provided a satisfactory answer,” to how near zero interest rates align with close to full employment and continued economic growth, Bullard said. Even though inflation is weak, rates will still be extraordinarily low even after an initial rate increase, Bullard said, and thus would continue to support economic growth and ultimately higher prices.
“The case for policy normalization is quite strong,” Bullard said, contending that the Fed’s dual employment and inflation objectives “have essentially been met.”
Bullard has been among the more vocal proponents of an earlier rate hike, though last month on the sidelines of the central bank’s Jackson Hole summit in Wyoming he acknowledged that global market volatility might cause the central bank to hold fire.
But it also indicates a larger degree of division creeping into the central bank’s discussions, as new concerns about low global inflation weigh against the progress the U.S. economy has made in lowering unemployment.