Best to hike U.S. rates sooner, go slower - Fed's Bullard
(Reuters) - The U.S. Federal Reserve should not delay an interest rate rise too long because it risks getting "behind the curve" and having to aggressively tighten policy later, a top Fed official said on Friday.
St. Louis Fed President James Bullard, speaking on Bloomberg TV and radio, said the European Central Bank's planned bond-buying programme is an "unmitigated good" for the U.S. economy, which is enjoying a lot of benefits right now including low longer-term borrowing costs and cheaper gasoline.
This week the Fed upgraded its assessment of the economy and repeated it will be patient as it approaches the first monetary tightening in nearly a decade.
"If I were going to play it strategically I'd rather get off zero sooner and then have more flexibility to go slower and react to data," said Bullard, a hawkish official who does not vote on Fed policy this year.
If the central bank waits too long this year to hike rates, he said, "we will have to move more aggressively at that point - instead of 25 points go 50 basis points, and that kind of dynamic is not a good one."
The Fed's key rate has been near zero since late 2008. Economists expect the Fed to move around mid-year to hike rates by a modest 0.25 percent, or 25 basis points.
Bullard said the Fed should not wait for wage growth before acting because it is a lagging indicator. He added the "dramatic" drop in oil prices looks to be persistent and has likely depressed some market-based measures of U.S. inflation, which have led some investors to believe the Fed will delay a hike.
"We're going to have to let the oil markets settle down (and) stabilise at some level," Bullard said.
(Reporting by Jonathan Spicer; Editing by Chizu Nomiyama and Meredith Mazzilli)
