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8/15, 9:23 PM (Source: TeleTrader)
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Bullard says Fed needs to take action to meet inflation target

Federal Reserve Bank of St. Louis President James Bullard said on Thursday that the market's assessment for inflation indicates it would reach around 1% over five years which must be factored into the next monetary policy decision. In an interview for Fox Business, Bullard said he "wouldn't mind" if the country was over 2% inflation and vowed to take action to meet the United States Fed Monetary Policy Committee's (FOMC) inflation target. Bullard also said that it doesn't matter if this goal was achieved through a 25 or 50 basis points cut to the interest rates and that he won't prejudge FOMC September meeting.

He added that the Fed needs to push for a policy which would alleviate the effects of the global slowdown on the American economy. He dismissed the inversion of the bond yield curve as a signal of recession in case it doesn't sustain over a longer period of time.

Even though several indicators point towards the health of the US economy, Bullard pointed out the negative effects of a trade war between Washington and Beijing and the slowdown in Europe and China as potential reasons for a rate cut, adding that lower rates may strengthen consumer spending.

Breaking the News / MA