Fed’s Bullard Sticks to Script, Says Unwise to Keep Hiking Rates

A top Federal Reserve official on Wednesday reiterated his opposition to further interest rate hikes given that U.S. inflation expectations have fallen and threaten the U.S. central bank’s credibility.

“I regard it as unwise to continue a normalization strategy in an environment of declining market-based inflation expectations,” St. Louis Fed President James Bullard said in prepared remarks.

The so-called break-even expected inflation rate in five years’ time has dropped as global markets sold off this year, and investors are now predicting a price measure of less than 1.5 percent. That “represents an erosion of central bank credibility with respect to the inflation target,” Bullard said in remarks for delivery to the Money Marketeers bond traders group here.

Reuters

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