The Fed's expected plans for rate increases may be too fast for an economy that has shown recent signs of weakness, St. Louis Federal Reserve President James Bullard said on Friday, sketching out the case for a continued go-slow approach.
Since the Fed raised rates in March inflation data have dipped and so have long-term bond yields, the opposite of what would happen if investors and the public felt the economy was going to continue on a strong enough course to justify further rate hikes.
In its most recent set of projections central bank officials said they foresaw raising rates two more times over the course of this year, a pace Bullard said may be "overly aggressive relative to actual incoming data on U.S. macroeconomic performance."
"On balance, the U.S. macroeconomic data have been relatively weak since the March...meeting," Bullard said at a breakfast presentation to the Association for Corporate Growth. "U.S. inflation and inflation expectations have surprised to the downside in recent months. Labor market improvement has slowed."
The Fed is expected to raise rates at its June policy-setting meeting, and will release fresh economic projections at that time.
Bullard, who regards the economy as mired in a low-inflation, low-growth rut, has said he feels the central bank needs to raise rates only one more time, then could pause until it is clear the economy has shifted to a higher gear.
His prepared comments did not mention whether the controversy developing around the Trump administration could influence the central bank if it begins weighing on business and consumer confidence, or drags down global markets as it did earlier in the week.