St. Louis Federal Reserve President James Bullard said that while world financial markets are volatile, U.S. fundamentals are good and the interest rate-setting Federal Open Market Committee shouldn't alter its forecast for the economy.
"The key question for the committee is — how much would you want to change the outlook based on the volatility that we've seen over the last 10 days, and I think the answer to that is going to be: not very much," Bullard told Bloomberg Television in an interview Friday at the Kansas City Fed's annual conference in Jackson Hole, Wyo.
"You've really got the same trajectory that the committee will be looking at that we were looking at before, so why would we change strategy, which was basically to lift off at some point," said Bullard, who votes on the FOMC next year.
Fed officials are weighing when to begin lifting interest rates for the first time since 2006. While the U.S. is growing at a solid clip, inflation is too low and the global outlook has been dimmed by a Chinese slowdown that is driving down commodity prices and spurring equity market turbulence.
"I actually think we're OK on the inflation front," Bullard said. "I've been arguing that we should get going, because interest rates — it's not that we're a little bit below normal, we're all the way down at zero, so you've got to think about: How is this going to play out over the next two to three years."
Bullard's comments come after Cleveland Fed President Loretta Mester, who also votes on the FOMC next year, told the Wall Street Journal that market turmoil had not so far altered her view the U.S. economy "is solid and it could support an increase in interest rates."
