(Bloomberg) — Federal Reserve Bank of St. Louis President James Bullard said the U.S. central bank’s policy setting is “extreme” and it’s time to start moving the benchmark lending rate and balance sheet “toward more normal levels.”
“I continue to be an advocate for beginning policy normalization,” Bullard told a Philadelphia Fed conference Friday, according to his prepared remarks.
U.S. central bankers hold their last meeting of the year on Dec. 15-16 and are widely expected to raise the benchmark federal funds rate, which has been held near zero since December 2008.
Fed Chair Janet Yellen told the congressional Joint Economic Committee on Thursday that household spending appeared “solid” and a rate hike this month was a “live option.”
A series of strong jobs reports are giving U.S. central bankers confidence that they can raise borrowing costs slightly and still count on inflation rising gradually back toward their 2 percent target.
Bullard is a voting member of the policy-setting Federal Open Market Committee (FOMC) in 2016.
“My argument has been that the FOMC’s goals have been met, while the FOMC’s policy settings remain extreme,” he said. “Prudent policy suggests edging the policy rate and the balance sheet toward more normal levels.”
American employers continued to add staff at a rapid pace in November. Payrolls climbed by 211,000 last month following a 298,000 gain in October that was larger than previously estimated, Labor Department figures showed Friday.
On the other hand, U.S. central bankers have missed their inflation target for more than three years. Their preferred measure of price pressures rose 0.2 percent in the 12 months through October.