Fed's Bullard Says Target Interest Rate Is Close To Where Taylor Rule Recommends

By Greg Robb Markets MarketWatch Pulse

The Federal Reserve's benchmark federal funds rate is close to where a famous mathematical rule recommends it should be, said St. Louis Fed President James Bullard on Monday. "The policy rate is approximately at an appropriate setting today," Bullard said, at a banking conference sponsored by the Atlanta Fed. The St. Louis Fed president said his analysis suggests a rule, based on research by Stanford University economist John Taylor, suggests the fed funds rate should be either 67 basis points or 155 basis points. The actual current policy rate is about 88 basis points. Bullard is not a voting member of the Fed policy committee this year. Bullard has previously said he didn't think the central bank needed to raise rates much more over the next few years. He does favor allowing the balance sheet to shrink.

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