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Fed's Bullard sees low real U.S. rates for a while to come
April 2, 2014 / 9:11 PM / 4 years ago

Fed's Bullard sees low real U.S. rates for a while to come

ST. LOUIS, March 2 (Reuters) - Real interest rates are low and will likely stay that way for a while to come, a top Federal Reserve policymaker said on Wednesday, adding the U.S. central bank will not raise its target rate for a “considerable” time.

“I think real interest rates look low, and look like they’ll continue to be low,” St. Louis Fed President James Bullard told reporters. “But I don’t have a great theory for that.”

Bullard had been asked why the Fed’s policy-setting Federal Open Market Committee said in a statement last month that its key federal funds rate may be kept below normal levels in the longer run.

“There’s just a lower real interest rate environment that’s been going on for a long time and therefore the real component of the federal funds rate will be smaller, and that’s pulling the normal funds rate down,” Bullard, a centrist at the Fed who does not have a vote on policy this year, said in describing his preferred explanation for the low rates environment.

He added however that a formal rate rise by the central bank is “still considerable distance away.”

Reporting by Jonathan Spicer; Editing by Meredith Mazzilli

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