St. Louis Federal Reserve Bank president James Bullard Thursday night said that further Fed interest rate cuts are possible, but said the days of thinking about monetary policy in terms of short-term rate changes are “coming to an end” and giving way to a more “quantitative” approach.
Bullard, in remarks prepared for a Regional Economic Summit in Evansville, Ind., also said fiscal policy needs to play an “important” role in responding to the economic and financial crisis.
“The U.S. economy continues to face substantial turmoil,” he said, and “financial markets are under unusual stress.”
While not predicting deflation, Bullard warned that it “might be particularly challenging” for the United States because it would make housing contracts “more expensive for borrowers.”
— Market News International