A rate hike may be made soon, Federal Reserve Bank of St. Louis President James Bullard said Thursday.
“The relatively minor downgrades contained in the March [Summary of Economic Projections] suggest that the next rate increase may not be far off provided that the economy evolves as expected,” Bullard said according to text released by the Fed.
“The state of the U.S. economy as of the March 2016 FOMC meeting was arguably consistent with December 2015 SEP projections. Yet, the Committee did not increase the policy rate at the March meeting,” Bullard noted. “This state of affairs might be viewed as ‘time inconsistent’ in the macroeconomics literature. Financial markets may have trouble interpreting Fed behavior in the future if this is the case.”
But, Bullard determined the FOMC was time-consistent in March, since global and national economic issues were the driving force in the inaction. “On balance, I think it is reasonable to interpret the Committee as remaining time-consistent at the March meeting.”
He noted, “The difference in macroeconomic outcomes between moving at one meeting versus another is currently small.”
