Reuters: Economic News: Bullard: Fed's 2014 rate language too pessimistic

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Bullard: Fed's 2014 rate language too pessimistic Apr 5th 2012, 14:03 St. LOUIS | Thu Apr 5, 2012 9:13am EDT St. LOUIS (Reuters) - A top Federal Reserve official said on Thursday that the central bank's projection of late 2014 for the first likely increase in interest rates sends too pessimistic a signal as the economic recovery strengthens. "The 2014 language in effect names a date far in the future at which macroeconomic conditions are still expected to be exceptionally poor," St. Louis Federal Reserve President James Bullard said. "This is an unwarranted pessimistic signal for the (Fed) to send." Bullard, who is not a voting member of the Fed's policy setting Federal Open Market Committee this year, said the central bank should now pause and assess developments in the economy. His comments point to increasing pressure on the U.S. central bank to declare that recent improvements in labor markets signal the recovery is firmly on track and to consider reversing the Fed's ultra-accommodative stance. A core group of Fed leaders, including Chairman Ben Bernanke, have been more cautious about the outlook, questioning whether the lofty 8.3 percent unemployment rate will continue falling as quickly as it has since last August. The Fed cut rates to near zero in December 2008 and has bought $2.3 trillion in bonds to boost growth. Minutes of the Fed's March policy meeting released Wednesday showed that at that gathering, a dwindling number of officials thought the central bank should launch another bond buying initiative if the outlook worsened.

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