Federal Reserve Bank of St. Louis President James Bullard said interest-rate policy should be left on hold after “unexpectedly low” price data suggested that inflation may not be on track to rise to the U.S. central bank’s 2% target.
“Recent inflation data have surprised to the downside and call into question the idea that U.S. inflation is reliably returning toward target,” Bullard said Monday in Nashville, Tennessee, according to the text of his prepared remarks. “The current level of the policy rate is likely to remain appropriate over the near term.’’
Policy makers left rates unchanged last month while saying they would begin running off their $4.5 trillion balance sheet “relatively soon,” in a signal that the central bank could announce the timing of the reduction program in September. The Fed bought trillions of dollars of securities to lower long-term borrowing costs after its policy rate was cut to zero in December 2008.
The Fed’s preferred gauge of price pressures rose 1.4% in the 12 months through June and has been under its 2% target for most of the last five years.