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“The current stance of monetary policy is ultra-easy, and remains appropriately calibrated given the macroeconomic situation in the U.S.,” Federal Reserve Bank of St. Louis President James Bullard said last Friday. Bullard discussed “U.S. Monetary Policy: Still Appropriate” as part of a Dialogue with the Fed event sponsored by the Bank’s Little Rock Branch. (View the news release.)
In his presentation, Bullard also discussed some of the possible risks to the Federal Open Market Committee’s (FOMC’s) current policy. “The ultra-easy monetary policy has been appropriate so far, but could reignite a 1970s-type experience globally if pursued too aggressively,” he said, noting that the 1970s era 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. “FOMC communications could be improved further by producing a quarterly monetary policy report (QMPR) 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.