Fed's Bullard: Inflation to pick up in 2014

Washington (Jan 10)   St. Louis Fed President James Bullard said Friday he expects inflation to pick up this year, despite having been surprised by lower prices last year. In a speech on the Fed's forecasts to the Indiana Bankers Association meeting in Indianapolis, Bullard said inflation "remains a wildcard" for the central bank. The Fed's preferred measure of inflation, the personal consumption expenditure index, rose at a 0.9% annual rate in November, well below the Fed's 2% target. The core rate rose at a 1.1% rate. "There is no generally accepted explanation for the low inflation readings," Bullard said. The St. Louis Fed president said both headline and core inflation should reach 1.6% by the end of the year. The Fed said in its latest policy statement that it was watching low inflation carefully. Bullard forecast growth would exceed 3% in 2014 and said the unemployment rate should fall to average 6.2% during the fourth quarter. Bullard was a voting member of the Fed's rate-setting committee in 2013 and does not have a vote this year.