Concerning the FF rate increase, he says:
Federal Reserve Bank of St. Louis President James Bullard said the U.S. central bank needs to change its policy statement to give it more room to maneuver with interest rate increases, in comments that also expressed hope the first rate rise will come soon.
“I do think it’s important to provide the [Federal Open Market Committee] some optionality” when it comes to its choices about what to do with short-term interest rates, Mr. Bullard told a Sirius satellite radio program on Friday.
“It would be important to take out the patient language at the March meeting” to allow the Fed to better tie changes in short-term rates to changes in economic data, he said.
Later he says:
Mr. Bullard said his preferred way of raising rates would be to boost the rate the Fed pays banks for reserves to 0.50%, while lifting the rate offered on reverse repurchase agreements to 0.25%, with the overnight fed funds rate target trading between those two points. Mr. Bullard said making the first move will help ease fears the Fed will get behind the curve and be forced to engage a more aggressive and disruptive campaign of interest rate increases.
Bullard does not get that, as it is the Fed is behind the curve. If not, why with all the so-called “extreme” degree of policy accommodation inflation has been below the 2% target and is still travelling in the wrong direction?
His “hearty ignorance” shows up clearly in the last paragraph:
Mr. Bullard shrugged off the impact of the strong U.S. dollar on the economy and said the nation would be getting additional support from low oil prices and low borrowing costs. He expressed surprise over the state of European economic weakness.
I bet that he would be extremely worried about inflation if oil prices were on the rise and the dollar was depreciating.
These people are “unidirectional”. For them inflation can never be too low and always risks going too high!