James Bullard, the President of the St. Louis Federal Reserve, said on May 30 that markets all over the world appeared to be excellently prepared for a spate of interest rate hikes in the summer. He, however, declined to fix a date on such a policy move.
Ready to go
Bullard said that his sense tells him that markets all around the world are prepared for a global increase in rate. This is not much surprising since there was a liftoff from December. He also said that the committee follows a policy of trying to slowly normalize rates over a period of time. He made this speech at a news conference post an academic conference which took place in Seoul. He further added that things will go extremely smooth if everything happens as envisaged.
Bullard said that a rebound in the US economy in terms of GDP growth is in all possibility materializing in the second quarter. However, he did not speak his opinion concerning whether the Federal Reserve should hike either in June or July. This is important for the US central bank's next policy meeting. These comments were made after the revised data was published on May 27, showing the US growth in the first quarter was not weak as that can be expected.
When it came to GDP data, economists said that the robust income growth, coupled with a number of signs that the economy has picked up steam during second quarter, may provide ammunition to Federal Reserve to ask for a raise in the interest rates as quickly as July. When asked a question about Donald Trump, the US Presidential candidate and his wish to bring change to the US monetary policy if TheDonald gets elected, the Fed honcho said that the organization was not dependent on the government. It will not follow any specific political prescription.
Buller said, irrespective of whether becomes President of America or not, any change that takes place in White House will not affect the Fed policy. He hopes that neither Republican nor Democratic is interested when it came to politicizing the Federal Reserve. Bullard has also noted that he was critical of the Fed's “dot plot” summaries which enable policymakers to rate outlooks. He admitted that many of such summaries provide exceedingly forward guidance. These takes away the ability of Feds to make the data dependent decisions.