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The Federal Open Market Committee (FOMC) is currently “on pause” because the existing stance of monetary policy is already ultra-easy and the U.S. economy has outperformed expectations since last fall, Federal Reserve Bank of St. Louis President James Bullard said Wednesday. Bullard discussed “The Fed on Pause” as part of a Dialogue with the Fed event sponsored by the Bank’s Louisville Branch. (View the news release.)
In his presentation, Bullard also discussed some risks to the pause policy, noting that “the main risk lies in potentially overcommitting to the ultra-easy monetary policy, reigniting the global inflation debacle of the 1970s,” an era that included four recessions in 13 years, double-digit inflation and double-digit unemployment. “The lesson was clear,” Bullard said. “Do not let the inflation genie out of the bottle.”
Bullard also spoke about recent, and possibly additional, improvements to FOMC communications. “It may be possible to improve FOMC communications further by producing a quarterly report similar to those produced by other central banks,” he said. “This could potentially provide a more fulsome discussion of the outlook for the U.S. economy and for policy than is currently provided.”
Furthermore, he said, the release of the report could be coordinated with Fed Chairman Ben Bernanke’s quarterly press briefings. Such a report could provide “a broader discussion of the U.S. outlook,” Bullard said.
During the event, Bullard also answered questions from the audience.