Fed's Bullard says global mar­kets seem well-pre­pared for sum­mer rate hike

The Pak Banker - - COMPANIES/BOSS -

St. Louis Fed­eral Re­serve Pres­i­dent James Bullard said on Mon­day global mar­kets ap­pear to be "well- pre­pared" for a sum­mer in­ter­est rate hike from the Fed, although he did not spec­ify a date for the pol­icy move.

"My sense is that mar­kets are well­pre­pared for a pos­si­ble rate in­crease glob­ally, and that this is not too sur­pris­ing given our liftoff from De­cem­ber and the pol­icy of the com­mit­tee which has been to try to nor­mal­ize rates slowly and grad­u­ally over time," Bullard told a news con­fer­ence af­ter speak­ing at an aca­demic con­fer­ence in Seoul.

"So my ideal is that if all goes well this will come off very smoothly." Bullard added a re­bound in U. S. GDP growth seems to be ma­te­ri­al­iz­ing in the sec­ond quar­ter, but re­served his opin­ion on whether the Fed should hike in June or July for the next pol­icy meet­ing at the U. S. cen­tral bank.

His comments fol­lowed re­vised data on Fri­day that showed first quar­ter growth in the U. S. was not as weak as ini­tially ex­pected.

Re­spond­ing to the GDP data, economists said strong in­come growth, to­gether with signs the econ­omy was pick­ing up steam in the sec­ond quar­ter, could give the Fed­eral Re­serve am­mu­ni­tion to raise in­ter­est rates as early as next month.

An­swer­ing a ques­tion on whether he thought U. S. pres­i­den­tial can­di­date Don­ald Trump would bring change to mon­e­tary pol­icy if elected, Bullard said the Fed was in­de­pen­dent and did not fol­low any par­tic­u­lar po­lit­i­cal pre­scrip­tion. "I don't think a change in the White House ei­ther way will af­fect Fed pol­icy," he said. "My hope is that nei- ther cam­paign is in­ter­ested in politi­ciz­ing the Fed."

Mean­while, Bullard noted he had been crit­i­cal of the Fed's "dot plot" sum­maries of pol­i­cy­mak­ers rate out­looks re­cently, say­ing they may be giv­ing too much for­ward guid­ance, re­mov­ing the Fed's abil­ity to make datade­pen­dent de­ci­sions.

The dol­lar ral­lied against Asian cur­ren­cies early on Mon­day af­ter the re­vised GDP data and on Fed Chair Janet Yellen's comments on Fri­day that a rate hike in the U. S. in com­ing months would be ap­pro­pri­ate.

The Korean won ex­tended losses af­ter Bullard's comments, trad­ing down 0.9 per­cent against the dol­lar as of 0142 GMT (09:42 p.m. EDT).

The Fed most re­cently raised in­ter­est rates in De­cem­ber last year, which was the first rate hike in nearly a decade.

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