St. Louis Federal Reserve President James Bullard, who until this week had said the U.S. economy needed only one interest rate hike for the next several years, said on Friday that he now views another rate hike next year as appropriate.Speaking two days after the Fed raised its benchmark rate by a quarter of a percentage point, Bullard told the Wall Street Journal that the rise in bond yields since the victory of U.S. President-elect Donald Trump has convinced him the economy can withstand a bit more monetary policy tightening than he had earlier projected. Bullard also said he wants the central bank to consider allowing its massive balance to sheet shrink beginning next year, while the Fed's policy target should still in his view be well below 1 percent.
That is sooner than Fed Chair Janet Yellen suggested earlier this week would be appropriate, when she said the Fed ought to first raise the policy rate to a level that gives it some scope to cut rates in the face of an adverse shock before beginning to trim the balance sheet.
(Reporting by Ann Saphir; Editing by Meredith Mazzilli)
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Updated Date: Dec 17, 2016 04:00:06 IST