One more interest rate hike may bring rates back to neutral, Fed´s Bullard says

One more interest rate hike may suffice to bring the US central bank´s policy rate back to a "neutral setting" a top official said.

Speaking at a UBS conference in London, St.Louis Federal Reserve president James Bullard said that "a single policy-rate increase, possibly in December, may be sufficient to move monetary policy to a neutral setting," Reuters reported.

Commenting on the recent moves in global capital markets, Bullard pointed out that the re-pricing in stocks and foreign exchange markets had been "within the experience" of the past year.

Predictions from some quarters for elevated levels of volatility in case of a presidential election victory by the Republican party and Donald Trump had not materialised thus far, he added.

Interest rates would rise should the US economy improve but the low-interest rate 'regime' would not come to a sudden end, Bullard said.

"We have a low interest rate regime and it is really not expected to turn around and mean revert."

However, it should be noted that Bullard in fact believed just one more rate rise would be needed in order to bring rates back to "neutral".

Also of interest, Bullard observed that policy changes mooted by the US President-elect in the past elections, such as on immigration and trade, were likely only to have an impact on the macroeconomy in the longer-term.

"Some types of policy changes that were (trailed) in the election would have an impact on the macro-economy only in the longer-term," he said, according to Market News International.

Bullard also pointed out the risk that well-intentioned policies, such as on infrastructure, might fall afoul of a proclivity on for pork barrel spending.

As of 1228 GMT the yield on the benchmark 10-year US Treasury note was higher by six basis points at 2.27%.