Feb 28 Federal Reserve Bank of St. Louis President James Bullard on Friday said he is no less optimistic for the U.S. economic growth outlook this year as a result of the downward revision to fourth-quarter gross domestic product.
Bullard, speaking on CNBC, said the fact that the pace of growth in the final three months of last year was cut to 2.4 percent from the 3.2 percent initially estimated "would not make me any less optimistic for 2014."
Bullard also said the tick up in core year-over-year inflation, reported in Friday's release of the GDP data from the Commerce Department, was consistent with the Federal Open Market Committee's view that inflation will move back toward U.S. monetary policy maker's target of 2 percent over the long term.
The St. Louis Fed president, who is not a voter this year on monetary policy, also said it is time for the FOMC to revisit the language in its policy statement regarding the thresholds for when the panel might begin to consider an interest rate increase. Currently, the FOMC has said it would not even entertain an increase in its key federal funds target rate until the unemployment rate reached 6.5 percent and inflation was not too divergent from the 2 percent target.
But the unemployment rate has fallen to 6.6 percent despite relatively weak growth in U.S. payrolls, presenting policy makers with a conundrum.
"We have to revisit the language," he said on CNBC, adding "I don't know where the chair (Janet Yellen) is going to come down" on the matter.