Fed’s Bullard to AFP: US interest rates ‘in right neighborhood’

There was some confusion last week over Fed Chair Jerome Powell's attempts to explain the reasoning behind the rate cut, the first in more than a decade. (File photo: Reuters)

The Federal Reserve has set US interest rates “in the right neighborhood” but will watch how the economy reacts to factors like the trade war before deciding its next move, James Bullard, a key member of the central bank policy board, told AFP on Tuesday.

However, in his first public comments since the Fed cut the benchmark interest rate last week, Bullard, president of St Louis Federal Reserve Bank, said the Fed “can't realistically move monetary policy in a tit-for-tat trade war.”

Still, policymakers have “already done quite a bit” to help the economy and account for the uncertainty surrounding President Donald Trump's trade wars, Bullard said in an interview.

Bullard, who was the first Fed official to call for the central bank to roll back some of the four rate increases made last year, says he has “penciled in” another rate cut for this year.

But he suggested he was comfortable with the current stance, saying he wants to see how the economy and inflation perform given the significant moves the Fed has already made, which can take six months before they show up in economic data.

“I do want to take stock about how the accommodation we've put in place has had an impact,” he said.

There was some confusion last week over Fed Chair Jerome Powell's attempts to explain the reasoning behind the rate cut, the first in more than a decade.

Bullard compared the situation to past economic expansions where the Fed has raised rates several times and then taken back a few steps.

“We're trying find the right level,” he said.

Trump has attacked the Fed almost daily, calling the independent central bank a threat to the US economy and demanding it react to China's moves to weaken its exchange rate and stimulate its economy.

Bullard, like Powell, brushed off those attacks.

“We're making decisions the way we always have,” he said.
 

SHOW MORE
Last Update: Wednesday, 20 May 2020 KSA 09:56 - GMT 06:56
Top