US Fed official supports maintaining current interest rate in near term

Source:Xinhua Published: 2017/8/8 7:53:22

Federal Reserve Bank of St. Louis President James Bullard said on Monday that it's appropriate for the Fed to keep the interest rate unchanged in near term in view of the low inflation.

"The current level of the policy rate is appropriate given current macroeconomic data," said Bullard in a speech at a conference held by America's Cotton Marketing Cooperatives in Tennessee on Monday.

He said the US economy has been stuck in the 2-percent growth regime despite the improved growth in the second quarter.

"Second-quarter real GDP growth showed some improvement from the first quarter, but not enough to move the US economy away from a regime characterized by two percent trend growth," said Bullard.

He expressed his concerns about the recent low inflation data. "Recent inflation data have surprised to the downside and call into question the idea that US inflation is reliably returning toward target," said Bullard.

The Fed official also doubted the expectation that the tighter job market could push up the inflation substantially. "Even if the US unemployment rate declines substantially further, the effects on US inflation are likely to be small," said Bullard.

Fed Governor Lael Brainard also expressed her concerns about the low inflation in recent months, and said that she would closely monitor inflation conditions before making decision on further interest rate hikes.

However, some other Fed officials downplayed the risks of low inflation and supported the central bank to continue raise interest rates gradually.

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