Fed’s Bullard : More Rate Increases Would Raise Risk of Recession

Federal Reserve Bank of St. Louis President James Bullard on Friday warned that more rate increases by the central bank would raise the risk the U.S. economy could fall into recession.

In materials for a presentation in Little Rock, Ark, Mr. Bullard, a veteran policy maker, repeated his long-held view that current economic circumstances call for the Fed to hold steady on short-term interest rates.

Mr. Bullard zeroed in on recent developments in the bond market as a reason to be worried about the Fed’s interest-rate policy choices.

He flagged what is called a flattening of the bond-market yield curve as a reason for worry. This flattening means the normally positive difference in yields between short- and long-dated bonds has gotten smaller.

A so-called inversion of the yield curve, where short-term yields are higher than long-term ones, has long been seen as a sign the economy is about to go into a contraction.
Source: Dow Jones

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