It would be tough for the Fed to move in October, Bullard says

It would be very difficult for the Federal Reserve to move on interest rates when it meets at the end of October, a top US central bank official said.

"It is very tough for the committee to make a big decision and then change it after only one meeting," James Bullard, the President of the St.Louis Fed, said on Tuesday.

"Roughly speaking the data has not been that different from what would have been expected, and the jobs report was weaker."

“The risk is that you stay with emergency settings way beyond the time emergency settings are required, with unknown consequences. So the simple thing to do is edge your policy back to normal.”

Bullard was speaking after delivering a speech on the modern challenges to central bank orthodoxy at the 57th annual meeting of the National Association for Business Economics (NABE) in Washington DC.

He argued against the three most oft-mentioned criticisms to the Fed’s conduct of policy; that it pursues too strict an inflation target, the need to maintain low real interest rates and the need to take into account globalisation.

As regards that last question, Bullard noted the literature according to which if each central bank pursues the appropriate policy for domestic purposes then the global result will be the best possible allocation of scarce resources.