St. Louis Federal Reserve Bank President James Bullard thinks the Federal Reserve got it wrong last week, and is using a baseball analogy to explain why.
Bullard paid Business Insider a visit Monday September 21 just days after the central bank’s decision to not raise rates.
“Inflation’s going to return to target and our policies are a long ways out of position compared to where we should be,” he said in an interview.
Bullard says that the inflation rate — which he says is a key factor for the Fed — is being misplayed.
Of three key factors (wage growth, unemployment and inflation), Bullard said inflation is the most important. And he thinks the Federal Reserve needs to move sooner, rather than later, by getting away from its zero-interest rate policy, or it could find itself surprised.
“Let me give you a baseball analogy,” he said. “So the hitter comes up, he’s a pull hitter, so you move your players onto one side of the field for that hitter and the next hitter comes up, and he’s not a pull hitter, but you leave all your players in the shift position. That’s where we are for monetary policy. You have got to move your guys back for the next hitter, you can’t be playing the shift for every single hitter.”
Bullard went on to say that unemployment is already close to its target rates, and could fall to around four per cent.
We’ll have more on our interview with Bullard online soon.
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