- James Bullard, Federal Reserve Bank of St. Louis President
The U.S. officials are desperately trying to calm down investors, following disappointing first quarter's GDP report. Last week, Federal Reserve Bank of Richmond President Jeffrey Lacker claimed he is confident GDP will be positive. He expects a 3% growth over this year. This week, another member, James Bullard, President of the St. Louis Federal Reserve Bank, pointed out that the world's largest economy's indicators are much closer to a normal state than it has been five years ago. He also warned that unstable gains in the labour market and persistently weak inflation are supporting the accommodative monetary policy. According to Bullard, the economy is now facing a serious problem or normalizing the monetary policy. Currently, central bank's balance sheets are growing only due to sluggish inflation, and still high unemployment.
At the moment, the Federal Reserve is also tapering its monetary policy. So far this year the monthly asset purchases amount to $45 billion per month. With tapering on its way, analysts revived speculations of the first rate hike. James Bullard also claimed in case the economy performs in line with forecasts over the remainder of the year, the central bank will revise its short-term interest rates earlier than most officials are expecting. It seems that 3% growth, 6% unemployment and payrolls at least at 200,000 will be considered as a healthy economic growth.
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