–Repeating Story Sent 20:36 ET Monday

By Yali N’Diaye

WASHINGTON (MNI) – The Federal Open Market Committee has in the
past put its policy on hold, St. Louis Federal Reserve President James
Bullard said Monday, adding this gives more time to assess the strength
of the economy.

In prepared remarks to the Mineral Area College Cozean Foundation
in Park Hill, Mo., Bullard reiterated his call for inflation targeting,
adding that the “ultimate” policy goal when it comes to prices is
headline inflation, as opposed to core inflation.

In fact, “Too much attention to core can mislead” policy, he said
in his presentation.

Discussing monetary policy after the end of the second round of
quantitative easing in June, Bullard noted that “Past behavior of the
FOMC indicates that the Committee sometimes puts policy on hold.”

In the current environment, this would mean keeping the feds fund
rate near zero and the “extended period” language “intact.”

It would also imply that “the balance sheet remains at the level as
of the time of the decision to go on hold.”

Putting the policy on hold, Bullard said, would give “the Committee
more time to assess economic conditions.”

On the inflation front, he noted inflation is “quite low today.”

Bullard reiterated his call for inflation targeting, which he
considers the modern version of a commodity standard.

More precisely, he referred to headline inflation, which is the
“ultimate” policy goal when it comes to prices, as opposed to core
inflation.

“Inflation targeting is a better choice in the current
environment,” he said, adding, “the FOMC should de-emphasize core
inflation in order to reconnect with households and businesses that
experience important price changes every day.”

** Market News International Washington Bureau: (202) 371-2121 **

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