The current level of U.S. prices is noticeably lower than what it would be if the Federal Reserve had delivered on its 2-percent inflation target, St. Louis Federal Reserve President James Bullard said, calling the trend “worrisome.”
In slides prepared for delivery in Tokyo on Friday, the U.S. central banker said U.S. prices are now 4.6 percent below the price level path established from 1995 to 2012, when inflation was growing near the Fed’s target of 2 percent each year.
“This is not as severe as the 1990s Japanese experience, but it is worrisome,” said Bullard, who does not vote on U.S. monetary policy this year.
Too-low inflation has kept the Fed from raising rates more than three times since the Great Recession, but since late last year most Fed policymakers have seen faster rate increases ahead, citing improvements in the labor market.
Bullard also said he sees minimal impact