February 25, 2016 / 1:38 AM / in a year

Fed cannot let low U.S. inflation expectations get out of hand

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St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015.Lucas Jackson

NEW YORK (Reuters) - The Federal Reserve must act to stop inflation expectations from getting too low, St. Louis Fed President James Bullard said on Wednesday, reiterating his concerns about continuing to raise interest rates.

The U.S. central bank cannot let low inflation expectations "get out of hand," he told a dinner of bond traders here, adding he "can't stomach" currently low readings. "It's just that they've fallen so far that it's got to be a concern."

Bullard said that if the U.S. economy faces a "bigger shock," the Fed has several policy tools at its disposal, but turning to so-called negative rates is unlikely. "There's too much talk about negative rates," he said.

Reporting by Jonathan Spicer; Editing by Leslie Adler

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