Fed’s Bullard: Nervous about low inflation
WASHINGTON (MarketWatch) — Inflation is too low and the Federal Reserve may have to do more if it gets weaker, said James Bullard, the president of the St. Louis Fed Bank, on Friday. In an interview with the Wall Street Journal, Bullard said he was nervous about low inflation readings and said the central bank did not “really have a good story” explaining why price pressures are so tame. If inflation was to fall below 1%, he would want the Fed to act by adding to its pace of asset purchases, and take off the table talk of tapering. The Fed’s favorite measure of inflation, the index for personal consumption expenditures was running at a 1% annual rate in May. This is well below the Fed’s 2% target. Bullard, who as a voting member dissented from the latest Fed policy statement, said Friday that Fed Chairman Ben Bernanke should not have released a timetable for ending asset purchases at his press conference. Bullard also said that Bernanke’s comment that asset purchases might end when the unemployment rate fell to 7% was not a formal threshold agreed to by the central bankers.
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