Bullard: One Hike Puts Us Near Value

One rate hike will put the United States near the Federal Reserve Bank of St. Louis' standard recommended value through 2019, Federal Reserve Bank of St. Louis President James Bullard said Monday.

"I conclude that a single 25-basis-point increase in the policy rate – from 38 to 63 basis points – will get us very close to the standard recommended value over the forecast horizon [which runs through 2019]," Bullard said, according to prepared remarks he was to deliver at Arizona State University.

If President-elect Donald Trump's policies are properly executed, he said, they could impact the current low-safe-real-rate regime, especially productivity growth, Bullard said.

"U.S. productivity growth is low and could conceivably be improved considerably. This could help to increase the real rate," he said.

Deregulation, infrastructure spending and tax reform could have "some impact on the low-safe-real-rate regime over the next several years," but any impact from immigration and trade policy reforms "will likely take longer."

Bullard said deregulation could improve productivity, since there are areas of excessive regulation. If infrastructure spending is channeled correctly, it would also boost output, as would tax reform if it encourages investment.

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