St. Louis Fed President James Bullard on Thursday said the Federal Reserve should normalize interest rates as the economy continues to improve.
Speaking in Germany, Bullard stood by the Fed’s decision last week to remove its pledge to remain patient before hiking interest rates.
“By removing ‘patient’, the Fed can return to more standard monetary policy decision-making, under which an appropriate policy rate is decided at each meeting,” Bullard said in prepared remarks this morning in Frankfurt.
He warned that rates at zero will raise the risk of asset bubbles.
“If a bubble in a key asset market develops, history has shown that we have little ability to contain it,” Bullard said. “A gradual normalization would help to mitigate this risk while still providing significant monetary policy accommodation for the U.S. economy.”
The material has been provided by InstaForex Company – www.instaforex.com