ST. LOUIS (Reuters) - A Federal Reserve official known as a policy hawk on Wednesday cited near-term concerns looming over the U.S. economy, adding his voice to a chorus of U.S. central bankers who are cautious about the economic outlook.
James Bullard, president of the St. Louis Federal Reserve, who has repeatedly said the U.S. central bank has been too patient in removing its accommodative monetary policy, struck a more cautious tone than he has previously. He pointed to weaker-than-expected consumer data such as retail sales as among worrying trends in the U.S. economy.
Bullard said in the big picture, the Fed should already be normalizing monetary policy. But the negative first-quarter gross domestic product reading appeared to dull his tone on the timing of a rate hike.
“I think that will all be transient and it will turn out that we’ll have stronger data later in the year and that will enable us to get going with the normalization process,” Bullard told reporters prior to a speech at the St. Louis Fed. “But I would like to see that confirmed in the near term so that we can get on with our normalization process.”
Bullard, who is not a voting member on the Fed’s policy-setting committee this year, is among several Fed officials who, in recent days, have highlighted the uncertain economic outlook as a top concern heading into the Fed’s next policy meeting, scheduled for June 16-17.
Bullard said the negative first-quarter gross domestic product reading was largely due to temporary factors such as poor weather, but said he would need to see stronger data before he could advocate for a rate hike in June. The Fed has said a June hike is on the table though the chances of that have fallen sharply with the weak data.
“It’s easy for me to sit here and say these things, but we need confirmation in the data ahead to show us that it does look like there is some bounceback in the second quarter and that the first quarter was an aberration,” Bullard said.
In speaking to reporters, Bullard was joined by Athanasios Orphanides, a professor at Massachusetts Institute of Technology’s Sloan School of Management and a former top research staffer at the Fed.
Orphanides said the Fed has waited too long to normalize monetary policy.
“Uncertainty should not be used as an excuse” to delay raising interest rates, he said.
Reporting by Michael Flaherty; Editing by Leslie Adler