Fed's Bullard Says Modernized Taylor Rule Supports No Rate Changes
18 October 2018 - 2:34PM
Dow Jones News
By Michael S. Derby
St. Louis Fed President James Bullard said Thursday that a
modernized way of looking at a venerable monetary-policy rule
supports his belief that no rate rises are needed right now.
Mr. Bullard said the Taylor Rule, which suggests a level for Fed
short-term rates based on how the economy is performing, can be
updated in a way that takes greater account of
inflation-expectations data and the fact that the labor market has
a lessened impact on price pressures.
"Incorporating these developments" creates a new Taylor Rule
"that suggests maintaining the current level of the policy rate
would be an appropriate policy over the forecast horizon," Mr.
Bullard said in material for a presentation in Memphis, Tenn.
Mr. Bullard, who isn't currently a voting member of the
interest-rate-setting Federal Open Market Committee, has long
favored delaying Fed rate rises. In late September, the Fed boosted
its overnight target rate for a third time this year. It is
expected to act again in December and press forward with more
increases in 2019. Most on the FOMC think rate rises are needed to
keep the economy from overheating.
Write to Michael S. Derby at
michael.derby@wsj.com<mailto:michael.derby@wsj.com>
(END) Dow Jones Newswires
October 18, 2018 09:19 ET (13:19 GMT)
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