Fed's Bullard warns on inflation, unemployment

Federal Reserve Bank of St. Louis President James Bullard said Sunday that unemployment is headed into double digits, while the medium-term inflation outlook poses more risk than generally believed, according to reported comments.


"Unemployment is leveling off, but we still may be headed toward double digits," Bullard was quoted as saying in a Bloomberg report.

According to data released earlier this month, the U.S. unemployment rate hit a 26-year high of 9.8% in September. See full story on September jobs report.





Bullard also voiced concern that popular perceptions ignore the risk of high inflation.
"I am concerned about a popular narrative in use today ... that the output gap must be large since the recession is so severe ... [and] any medium-term inflation threat is negligible, even in the face of extraordinarily accommodative monetary policy. I think this narrative overplays the output-gap story," he was quoted as saying by Dow Jones Newswires.

Bullard -- currently a non-voting member of the Federal Open Market Committee but set to have a vote on the policy committee next year -- made the remarks at an annual meeting of the National Association of Business Economics.

Bullard also said expectations for economic growth of 2.5% to 3% in the second half of this year are "reasonable."

- Via Market Watch