- St. Louis Fed President James Bullard
It seems that Fed officials are still trying to persuade investors that the world's largest economy is on the right track and first quarter's contraction will be only a temporary nightmare that will be offset by a rapid growth in the second quarter. In contrast, analysts are getting more pessimistic about the U.S. economy, as some commercial banks already trimming their growth forecasts.
On Thursday, Fed's top official, James Bullard, pointed out that unemployment rate will fall below 6%, while inflation will move above 2%, putting economic growth closer to normal levels. He also reiterated his view that interest rates will be raised by the end of the first quarter in 2015, based on his own forecasts that growth will stand at 3% for the next four quarters. However, he also sees a chance for revision of his forecasts, especially if data surprises markets to the downside.
Following a shocking contraction in the first quarter, economists from Goldman Sachs trimmed their second quarter growth forecast to 3.5% from 4.1% expected earlier, while Barclays economists are now expecting only a 2.9% growth, compared with 4%. In case pace is below 3%, the world's largest economy could show contraction for the first half of the year, due to a 2.9% contraction in first three months.
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