Federal Reserve continues to stoke concerns over its policy signalling recent rate hike could be premature. According to James Bullard, the head of the Federal Reserve Bank of St. Louis, December hike probably made monetary too restrictive as it threatens sustainable convergence of inflation to the target.
“We are putting more downward than upward pressure on inflation,” which may be moving further away from the Fed’s 2 percent target level, Bullard said.
According to him, in 2019, inflation could again be below the target.
Bullard became the first official of the Federal Reserve to assume that the US central bank went too far in raising rates and now its policies are holding back the growth of the economy and the pace of price increases.
Bullard said the Fed in 2019 should be “cautious” in its decisions.
Last year, the US central bank raised interest rates four times, but now it seems that it decided to keep borrowing costs in the range of 2.25-2.50 percent for a while.
The average inflation rate in the United States since 2012 is about 1.6 percent, still below the target of 2 percent.
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