Fed President ‘Bullish’ on the U.S. Economy

The president of the ""St. Louis Federal Reserve Bank"":www.stlouisfed.org/, James Bullard, made national headlines recently following his strong statements regarding the state of U.S. real estate. Among the revelations included in Bullard's February speech - the declaration that nation's housing markets have officially ""hit bottom.""

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During his speaking engagement in Chicago, Bullard applied pressure to the ""Federal Open Market Committee"":http://www.federalreserve.gov/monetarypolicy/fomc.htm, calling the group's decision to extend ultra-low interest rates until 2014 a ""looming disaster"" for the country. ""If we continue using this

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interpretation of events, it may be very difficult for the U.S. to ever move off of the zero lower bound on nominal interest rates,"" Bullard said of the FOMC's actions.

Bullard cited the decline in U.S. home prices and resulting ""permanent loss of wealth"" as evidence against the FOMC's argument that the country's economic slack demanded that rates be kept near zero. He went on to state that the central bank's policy ""punishes savers in the economy"" and ""hurts older Americans.""

""The risks have to be weighed against the rewards,"" Bullard said. ""We shouldn't do any further QE unless we see deterioration in the economy and especially a threat of deflation that is rising considerably higher than it is today.""

Commenting on his current position, Bullard reiterated his endorsement of the Fed's 2 percent target for inflation. Bullard added that the Fed's inflation initiatives ""will serve the nation well for years.""

Bullard elaborated on his predictions for the nation's economic picture during 2012, noting that he anticipates unemployment levels in the U.S. will fall below 8 percent. Additionally, Bullard stated that he believes economic improvement around the country will meet or exceed 3 percent.