St. Louis Fed’s Bullard Sees Rate Hike Sooner Than Expected

While this is just one Fed president, it is a break from the norm and is not what the markets are expecting. In fact, Fed Funds futures at the CME website are currently projecting that there is not a 100% chance of a rate hike priced in until June of 2015. Even then, that is only a 0.25% Fed Funds Rate that is being priced in. It is not until November of 2015 that a 0.50% Fed Funds Rate is priced in with just over a 100% certainty.

Bullard also commented that the housing sector was a concern, but that growth will remain. And while the Fed is closer to its goals, it will likely require 3% GDP growth for the fed to achieve its goals. Bullard even thinks that the natural unemployment rate is now closer to the mid-5% levels.

Bullard’s comments were made in a presentation called “A Tame Taper” at the Arkansas Day with the Commissioner event hosted by the Arkansas Bankers Association on Friday.