Bullard says Fed 'far behind' schedule for interest rate hike
By Michael Flaherty
TUPELO Miss. (Reuters) - The Federal Reserve's third round of bond buying had a better than expected impact on the U.S. labor market, a Fed official said on Thursday, making it all the more necessary for the central bank to move faster with hiking interest rates.
St. Louis Fed President James Bullard pointed out that the economy has exceeded the economic forecasts the Fed presented in September 2012, when the central bank's latest bond buying program - known formally as Quantitative Easing (QE) - was launched.
"The policy rate normalization process remains far behind the schedule laid out at the launch of QE3," Bullard said in prepared remarks for a business event here on Thursday.
Bullard said raising rates in the first quarter of 2015, a forecast he has maintained throughout the year, would already be past what a standard monetary policy rule calls for.
Bullard is not a voting member on the Fed's policy setting committee. The former central bank staffer said inflation continues to run somewhat below the Fed's policy setting committee's target of 2 percent.
Bullard said the committee will have to change its interest rate guidance language at the next meeting.
Since March, the committee has said it will keep rates ultra-low for a "considerable time" after its current bond buying program ends. That program is set to end this month.
"My presumption is that something will have to change," Bullard said to reporters after a speech to business leaders. "I don’t think we can use the existing 'considerable time' language." Continued...