TOKYO May 25 The current level of U.S. prices
is noticeably lower than what it would be if the Federal
Reserve had delivered on its 2-percent inflation target, St.
Louis Federal Reserve President James Bullard said, calling the
In slides prepared for delivery in Tokyo on Friday, the U.S.
central banker said U.S. prices are now 4.6 percent below the
price level path established from 1995 to 2012, when inflation
was growing near the Fed's target of 2 percent each year.
"This is not as severe as the 1990s Japanese experience, but
it is worrisome," said Bullard, who does not vote on U.S.
monetary policy this year.
Too-low inflation has kept the Fed from raising rates more
than three times since the Great Recession, but since late last
year most Fed policymakers have seen faster rate increases
ahead, citing improvements in the labor market.
U.S unemployment registered 4.4 percent in April, below what
Fed officials believe is a sustainable level. Most Fed officials
expect to raise the target interest rate three times this year,
including the increase they made after their March policy
But Bullard said that a surge in inflation is unlikely even
if unemployment falls further.
With inflation still below 2 percent and inflation
expectations and Treasury yields falling since the Fed raised
rates in March, the Fed's plans for rate increases may be
"overly aggressive" he said.
The Fed is expected to raise rates at its June
policy-setting meeting, and will release fresh economic
projections at that time.
Bullard, who regards the economy as mired in a
low-inflation, low-growth rut, has said he feels the central
bank needs to raise rates only one more time and should then
pause until it is clear the economy has shifted to a higher
(Writing by Ann Saphir; editing by Diane Craft)