Fed may signal caution on rate hikes

Washington

THE Federal Reserve is likely to reassure investors later this month that it won't stand idle if global turbulence threatens the US economy, but a proposal from one top policymaker to keep on buying bonds looks to be a bridge too far.

James Bullard, who heads the St Louis Fed, suggested on Thursday that sticking with bond purchases for a few more months would give policymakers the time needed to assess a recent deterioration in the inflation outlook. "Inflation expectations are dropping in the US and that is something that a central bank cannot abide," Mr Bullard said on Bloomberg Television.