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Federal Reserve member James Bullard: "Traders shouldn't be waiting for an inevitable recession"
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Loading...Federal Reserve member James Bullard told that traders should not be waiting for an "inevitable recession" and spoke of a solid outlook for the U.S. economy.
"We should always plan for the worse and hope for the best. I think the idea that you're inevitably going to have a recession just because you've had an expansion for a while is not really right," Bullard told.
"The U.S. expansion, the growth rate has been very slow since the financial crisis ... The level of output is actually quite a bit below where it would be if you had a more normal expansion so that kinda argues for the idea that maybe the expansion can go on for a while longer."
The latest growth rate numbers out of the U.S. pointed to an economic expansion of 4.1 percent in the second quarter of the year — the highest in nearly four years. At the start of May, data showed that the U.S. economy had entered its second-longest economic expansion on record, but also the slowest in the post-war period.
Bullard mentioned Australia as an example of a country where the economic expansion has lasted for a "very long time," "25 years or more."
However, Bullard, who is not currently a voting member of the central bank, noted that U.S. businesses are "very worried" about trade frictions with other countries.
Bullard told that he is indeed "worried" about the pace of future rate hikes. "I have been worried that we don't overdo normalization," he said.
The U.S. Federal Reserve has been lifting rates in an attempt to normalize monetary policy. However, if the Fed announces several rates hikes in a short period of time, that could affect this curve and potentially support an inversion.
Source: CNBC
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