Dec 16 St. Louis Federal Reserve President James
Bullard, who until this week had said the U.S. economy needed
only one interest rate hike for the next several years, said on
Friday that he now views another rate hike next year as
Speaking two days after the Fed raised its benchmark rate by
a quarter of a percentage point, Bullard told the Wall Street
Journal that the rise in bond yields since the victory of U.S.
President-elect Donald Trump has convinced him the economy can
withstand a bit more monetary policy tightening than he had
Bullard also said he wants the central bank to consider
allowing its massive balance to sheet shrink beginning next
year, while the Fed's policy target should still in his view be
well below 1 percent.
That is sooner than Fed Chair Janet Yellen suggested earlier
this week would be appropriate, when she said the Fed ought to
first raise the policy rate to a level that gives it some scope
to cut rates in the face of an adverse shock before beginning to
trim the balance sheet.
(Reporting by Ann Saphir; Editing by Meredith Mazzilli)