Federal Reserve Bank of St. Louis President James Bullard said he’s predicting the central bank’s first interest-rate rise will happen in the first quarter of next year as unemployment falls and inflation quickens.
Asked about his forecast, he said: “I’ve left mine at the end of the first quarter of next year.”
“The Fed is closer to its goal than many people appreciate,” Bullard said. “We’re really pretty close to normal.”
Speaking on Fox Business Network, Bullard said the U.S. jobless rate may fall below 6% and inflation rise near 2% by the end of this year. He said markets may not be fully appreciating how close the Fed is to reaching it goals.
U.S. stocks fell for the third time in four days following his comments and a report showing consumer spending rose less than forecast. The Standard & Poor’s 500 Index (CME:SPM14) slid 0.5% to 1,949.54 at 10:58 a.m. in New York.
Bullard, who is not a voting member of the policy-setting Federal Open Market Committee this year, won’t vote again until 2016.
Commerce Department figures today showed the price measure tied to consumer spending watched by the Fed rose 1.8% from a year earlier. The Fed’s inflation goal using this measure is 2%.
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