Some Good Years Ahead on Fed ‘Patience’

Some Good Years Ahead on Fed ‘Patience’

The Federal Reserve Bank of St. Louis’ President James Bullard applauded the shift away from its policy of raising interest rates, saying that should help to ensure a solid US economy for the next 2 years.

“I think it set us up for a very good couple of years here,” Mr. Bullard said in a TV interview Friday. Mr. Bullard, a monetary policy voter in Y 2019, has been the most dovish Fed official over the past 2 years, arguing the US economy is stuck in a relatively slow growth regime with little inflation, so higher rates are not needed.

He said that he was not suggesting the Fed was committed to standing pat on policy for a specific period of time.

“I think this concept of being on hold — I would like to think that we’re out of the business of penciling in further increases that have to be made,” he said. “But obviously we will react to data as it comes in. So if the economy performs better than expected or worse than expected going forward, we’re willing to move in either direction.”

The Federal Open Market Committee (FOMC) this week held rates unchanged and dropped its guidance for more gradual rate hikes, replacing it with an explicit reference to being ‘patient’.

Investors took that to mean no rate increase for several months, and interest-rate futures suggest they are betting a cut is roughly as likely as a hike.

Mr. Bullard spoke shortly after US Labor Department data showed that US employers added 304,000 new jobs added in January, while average hourly earnings growth increased just 0.1% from the month before.

“The feedback from tight labor markets to inflation is extremely weak right now,” he said.

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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