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Fed's Bullard repeats view of hiking 'now', cites asset bubble risk

Wednesday, April 15, 2015 - 21:47
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Falling unemployment and an improving US economy are evidence that the Federal Reserve should start raising interest rates, a top Fed official said on Wednesday, citing risks of asset bubbles if the central bank keeps rates too low for too long.

[WASHINGTON] Falling unemployment and an improving US economy are evidence that the Federal Reserve should start raising interest rates, a top Fed official said on Wednesday, citing risks of asset bubbles if the central bank keeps rates too low for too long.

"A risk of remaining at the zero lower bound too long is that a significant asset market bubble will develop," St Louis Federal Reserve Bank President James Bullard said in prepared remarks.

Mr Bullard, a policy hawk who has long called for the Fed to begin hiking rates, repeated his view that the Fed should not wait to raise short-term borrowing costs.

"Now may be a good time to begin normalizing US monetary policy so that it is set appropriately for an improving economy over the next two years," Mr Bullard said in remarks delivered at the annual Hyman Minsky conference. He added that "even with some normalization, monetary policy will remain exceptionally accommodative."

Mr Bullard, who is not a voting member on the Fed's policy-setting committee this year, said the US economy is likely to maintain a growth rate near 3 per cent over the medium term.

REUTERS

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