The Federal Reserve should not be in any rush to increase United States interest rates regardless of a surge in June hiring, according to St. Louis Fed President James Bullard on Tuesday. In the past, Bullard has said that he believes that the Fed might only need to raise interest rates once for the next few years. He adds that he believes job creation’s momentum is going to decrease in the foreseeable future, which is certainly normal thing since the economy is headed towards full employment. It looks as though he might be correct when he predicted low growth, low inflation, and low unemployment in coming months.
“You probably can’t add 200,000 jobs a month anymore,” Bullard stated. “I would expect continued slowing in the pace of jobs growth, and would regard that as a normal development for this stage of the business cycle.”
Bullard, a voting member of the U.S. central bank’s rate-setting committee, changed his view of monetary policy, finalizing that the United States had gone into a low growth “regime.” The apt target interest rate for the Fed, he added, is also low, which means that the Fed only needs to change interest rates once unless there is an unexpected event. When they hold a meeting later on during the month of July, the Fed officials will look through a ton of data, which includes a job increase of 287,000 during June, indicating the Untied States recovery is on track. A rate increase will likely not happen, according to officials. Bullard argues that the Fed’s rate outlook does not need to differ until growth and inflation have shifted upwards. “The policy rate would likely remain essentially flat over the forecast horizon,” of two and a half years, he stated in remarks at the St. Louis Fed.