Fed's Bullard: 2014 rates language 'pessimistic'

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Fed's Bullard: 2014 rates language 'pessimistic' (by Steve Goldstein)

WASHINGTON (MarketWatch) -- St. Louis Fed President James Bullard, who isn't a voting member this year of the Federal Open Market Committee, on Thursday called current language about keeping rates low through the end of 2014 "an unwarranted pessimistic signal." He said at the 13th Annual InvestMidwest Venture Capital Forum that apart from real estate, the output gap isn't that big. But he said real estate will take a long time to recover. Households would have to pay down mortgage debt by about $3.7 trillion to return to a normal loan-to-value ratio of 58.4%, assuming a normal ratio based on the average LTV ratio from 1970-2005. "This will take a long time," he said. "It is not a matter of business cycle frequency adjustment."

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