The weak September employment report did not persuade St. Louis Fed President James Bullard to change his call for a rate hike. In a speech in New York on Friday afternoon, Bullard said the prudent course of action for the U.S. central bank would be to start to increase interest rates. He said that a rate hike would extend the length of the current expansion. Bullard said the Fed has met its mandate of maximum employment and is closer to 2% annual inflation target than commonly thought based on the Dallas Fed's trimmed mean inflation gauge which is running at a 1.7% annual rate. Bullard dismissed arguments that the Fed should pay attention to the weak global environment. He said policy should be based on domestic variables.
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