February 22, 2018
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St. Louis Fed President James Bullard shared his views on economic growth and inflation last year as well as his outlook for growth and monetary policy in 2018. He spoke Thursday during an interview on CNBC’s Squawk Box.
He noted that real GDP growth in the U.S. surprised to the upside in 2017, while inflation remains below the Fed’s 2 percent target. Regarding the outlook for the economy, he said, “I think people are optimistic and hopeful that we’ll have another good year in 2018.” However, the idea that the Fed would need to raise the policy rate by 100 basis points in 2018 “seems like a lot to me,” he said.
He also said he is concerned that if the Fed raises interest rates a bunch of times this year, Fed policy will turn restrictive. “The so-called r-star, the neutral fed funds rate, is pretty low. If we go up 100 basis points in this environment, you’re going to be restrictive in an environment where inflation is still below target,” he explained.