Federal Reserve Bank of St. Louis President James Bullard said he may push back his forecast for an increase in interest rates this year because economic data hasn’t met his expectations.
“There is a spate of weaker data here,” Bullard said to reporters after a speech in St. Louis. “When I go to the next forecast round, I may be forced to push mine over to 2015 as well.”
Bullard was one of two Federal Open Market Committee participants who projected in December that the Fed will begin to increase the main interest rate from zero in 2014, with the majority looking for higher rates to start in 2015. The Fed has kept is benchmark rate near zero since December 2008.
Last December, “it was a close call of whether it would be 2014 or 2015,” said Bullard, who doesn’t vote on policy this year. “We will take a look at the data for the March meeting, so it is not too far away, and I will make an assessment about whether I want to push mine out to the future or not.”
The St. Louis Fed chief said unusually severe winter weather is probably the main reason for the economic slowdown in the first quarter. He said he still expects the economy to gain strength this year, with unemployment falling below 6 percent by the end of 2014 from 6.6 percent.
The payroll report for February scheduled for release on March 7 “will be important” for policy makers formulating forecasts before their March 18-19 meeting, Bullard said. Harsh winter weather probably influenced employment, he said.
Inflation below the central bank’s 2 percent target gives the policy committee room to be accommodative, Bullard said, adding that he expects price increases to exceed the FOMC’s target in 2015.
Bullard joined the St. Louis Fed’s research department in 1990 and became president of the regional bank in 2008. His district includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.