(Adds further context from third paragraph, discussion of
banks)
By Howard Schneider
WASHINGTON, May 5 (Reuters) - St. Louis Federal Reserve
President James Bullard said on Friday he was ready to keep an
"open mind" about whether to raise rates or hold them steady at
the Fed's June meeting, joining the "data dependent" stance of
his colleagues after a year of urging them on to consecutive
rate increases.
Bullard said he felt the benchmark policy rate will
ultimately need to "grind higher" because he anticipates slower
progress on inflation, but “I am willing to be data dependent
and not prejudge...It is impressive that we moved above the 5%
benchmark," with a rate increase this week to a level between 5%
and 5.25%.
The comments from someone who has been an aggressive
advocate of higher rates further cements this week's Fed policy
decision opening the door to a possible pause as an important
turn from a run of 10 consecutive meetings, dating to March
2020, where the benchmark policy rate was heading predictably
higher.
Bullard said he felt the 5% to 5.25% level reached this
week was still only at the "low end" of what might be needed;
his own projections have suggested rates may need to move up
another half point to put inflation on a steadily downward path.
He said he felt there are risks, moreover, in leaving
the policy rate where it is if inflation continues to move in
what he considers a largely sideways direction, rather than
steadily lower.
The economy remained resilient, he said, citing an April
jobs report showing the unemployment rate at 3.4% and an
additional 253,000 positions added to payrolls. Stress in the
banking industry, he said, was unlikely to cause enough of a
contraction in credit to damage the macroeconomy, or cause a
recession that he continues to view as unlikely.
Still, "I am pleased we got over the 5% mark with the
policy rate," Bullard said. "I am willing to look at data and
see where we are when we get to the next meeting" on June 13-14.
(Reporting by Howard Schneider; Editing by Andrea Ricci)
