The Federal Reserve should focus on the global, rather than domestic, output gap, James Bullard, the president of the St Louis Federal Reserve, said on Thursday.

"US policymakers often say the [domestic] output gap is large; this is interpreted as putting downward pressure on US inflation," Bullard said. However, it could be the global output gap that mattered, and that was "probably much narrower or even positive; this would then be interpreted as putting upward pressure on inflation", he said