Fed Bullard believes one rate hike in 2017 is “about right”

One rate hike in 2017 will be “about right,” according to James Bullard. He stated that such amount of rate hikes is appropriate in the current environment.

13 January, AtoZForex One of the key US monetary policymaker believes that there is only one interest rate hike needed in the current year. James Bullard, the President of St. Louis Federal Reserve (Fed) said that the current level of the US central bank’s key policy rate is “about right.”

One rate hike in 2017 is “about right”

Mr. Bullard has stated that the current level of interest rates across the US is right, taking the current environment into the consideration. This implies that even if the political regime has shifted, the interest rate policy change is not obligatory. Mr. Bullard has stated:

“We’ll see if it switches, but I wouldn’t bet on it.”

Mr. Bullard did not have a vote in the Federal Open Market Committee in 2017. He has stated that he did not pay attention to the country’s fiscal policy when assessing the US economic forecasts.

According to James Bullard, some of the policies discussed by Donald Trump could have the contrary effects on the US economy. For instance, planned deregulation, tax reforms, and infrastructure spending could increase the productivity and growth of the US economy. However, Trump’s border taxes policies and immigration limitation could cause the conflicting effect.

Low-interest environment significance

Mr. Bullard stated that he needed more clarity before changing his forecasts. In his comments, the Fed policymaker also stated that any legislation boosting political omission of the monetary authority was a bad idea. This is despite the fact that it was more likely to surpass the provided current political environment.  Finally, Mr. Bullard has favored the opportunity of more members with business background inside the FOMC.

Moreover, James Bullard is an author of a significant paper, which was published in June 2016. The paper talked about the necessity of Fed acknowledging the fact that the US is now in low-interest rate environment. Mr. Bullard argued that this fact needs to be taken into consideration when deciding on the monetary policy.

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