HONG KONG -- The U.S. unemployment rate will fall below 6 percent by the end of this year, a Federal Reserve official said Wednesday, offering a bullish view on the country's economy after central bank comments sent shock waves through financial markets last week.
James Bullard, president of the Federal Reserve Bank of St. Louis, said that the outlook for the U.S. economy is "quite good," despite data from early in the year.
"The biggest thing is that unemployment has come down more quickly than expected," said Bullard, speaking on a panel at the annual Credit Suisse (CS) investor conference in Hong Kong.
He added later during a question and answer session that more progress is needed in the labor market before U.S. policymakers can consider raising interest rates.
Bullard is known to be one of the Fed's more hawkish policymakers. He previously advocated for a rate hike as early as 2014, a stance he appears to have backed away from.
U.S. monetary policy tightening took center stage last week after a two-day policy meeting, when the Fed said it expected to keep benchmark interest rates near zero for a "considerable time" after it wrapped up a bond-buying stimulus program, which it is widely expected to do toward the end of the year.
Pressed on the statement at a news conference afterward, Fed Chairman Janet Yellen said the phrase "probably means something on the order of around six months or that type of thing."
Bullard has joined other Fed officials in playing down the "six months" comment from Yellen, saying it was in line with what the private sector was anticipating. He repeated that view Wednesday.
The unemployment rate for February rose to 6.7 percent from a five-year low of 6.6 percent as Americans flooded into the labor market to search for work. But the rate hovering around the Fed's previous 6.5 percent benchmark has raised the prospect of the central bank moving to push up rates more quickly than some in the market previously expected.
Fed officials appear increasingly worried that keeping policy so easy for so long could encourage investors to take too many risks, building bubbles that may eventually pop and roil financial markets.
The U.S. economy is "set for a pretty good year," Bullard said Wednesday. "Despite the spate of weaker data in the January, February time frame."
The Fed has held rates near zero since late 2008 to help the economy recover from the 2007-2009 recession.
Bullard was asked about where he saw interest rates in 2016, at which point he referred to his "dot."
The Fed introduced a "dot chart" in its January 2012 economic projections. Each dot represents the view of an individual policymaker on how they see the appropriate level of interest rates for the coming few years.
"I'm here to tell you that my dot has not changed," Bullard said.
Data on Tuesday showed U.S. consumer confidence surged to a six-year high in March and house prices increased solidly in January, positioning the economy for stronger growth after a weather-induced soft spot.
-Additional reporting by Saikat Chatterjee and Twinnie Su.