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CNBC Exclusive: CNBC Excerpts: Federal Reserve Bank of St. Louis President James Bullard Speaks with CNBC’s “Squawk Box” Today

WHEN: Today, Monday, September 21st

WHERE: CNBC's "Squawk Box"

Following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Federal Reserve Bank of St. Louis President James Bullard on CNBC's "Squawk Box" (M-F, 6AM-9AM ET) today. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000423050, http://video.cnbc.com/gallery/?video=3000423048 and http://video.cnbc.com/gallery/?video=3000423040.

All references must be sourced to CNBC.

BULLARD ON ARGUING AGAINST THIS DECISION

JAMES BULLARD: I ARGUED AGAINST THIS DECISION. I THOUGHT IT WAS TIME TO MOVE AND I ACTUALLY WOULD HAVE DISSENTED ON THIS DECISION.

JOE KERNEN: WHY?

BULLARD: I THINK ITS INAPPROPRIATE TO REACT TO FINANCIAL MARKET TURMOIL, YOU KNOW

KERNEN: IN CHINA.

BULLARD: IN CHINA. WELL, YOU KNOW THESE THINGS CAN GO DOWN BUT THEY CAN RALLY A COUPLE WEEKS LATER AND THEN PEOPLE SAY ARE YOU GOING TO NOW CHANGE YOUR POLICY AGAIN?

BULLARD ON IT BEING TIME TO NORMALIZE

THE CASE IS NOT COMPLICATED. THE CASE IS THAT POLICY SETTINGS ARE AN EMERGENCY, AND THE ECONOMY ITSELF, THE GOALS OF THE COMMITTEE ESSENTIALLY HAVE BEEN MET. UNEMPLOYMENT IS 5.1% AND INFLATION WHICH IS BEING DRIVEN DOWN BY OIL RIGHT NOW BUT IF YOU STRIP THAT OUT AND LOOK AT THE DALLAS FED TRIM MEETING INFLATION IS ABOUT 1.6% YEAR-OVER-YEAR. THATS ABOUT AS CLOSE AS WE HAVE BEEN TO OUR GOAL VARIABLES IN 50 OR 60 YEARS. SO THE PRUDENT THING TO DO IS TO START INCHING YOUR POLICY LEVERS TO NORMAL READINGS.

BULLARD ON INCHING BACK TO NORMAL

OKAY PEOPLE SAY YOU GOT WORRIES, YOU GOT ELEMENTS OF THE LABOR MARKET THAT ARENT QUITE RIGHT, YOU GOT THIS AND THAT. WE'RE FINE. THATS FINE. WE ARE GOING TO HAVE A VERY EASY MONETARY POLICY OVER THE NEXT THREE YEARS NO MATTER WHAT WE DO. SO DONT COME TO ME AND SAY THERE ISNT ENOUGH ACCOMMODATION IN THE SYSTEM. THERE IS ENOUGH ACCOMMODATION IN THE SYSTEM. WE'RE ADDRESSING ALL THE THINGS WE NEED TO ADDRESS, AND I UNDERSTAND THAT THERE ARE RISKS OUT THERE BUT YOU HAVE TO TAKE A PRUDENT POLICY AND START TO INCH YOUR WAY BACK TO NORMAL.

BULLARD ON LOOKING FOR A WAR

WE'RE ABOUT 4/10 AWAY ON INFLATION FROM OUR TARGET AND THE 5.1% IS BASICALLY RIGHT ON TOP OF OUR ESTIMATE OF THE NATURAL RATE OF UNEMPLOYMENT. SO WE'VE BASICALLY VANQUISHED ALL OUR FOES. THE TANKS ARE ON THE FIELD, THE ENEMY HAS LEFT THE FIELD, AND WE'RE LOOKING FOR ANOTHER WAR TO FIGHT. WE SHOULDN'T BE DOING THAT.

BULLARD ON MEETINGS

BY HAVING A PRESS CONFERENCE EVERY OTHER MEETING, IT'S UPSETTING THAT KIND OF TRADE OFF THAT IS NORMALLY MADE. THAT PUTS HEAVY PRESSURE ON THE SEPTEMBER MEETING WHICH DIDN'T HAVE TO BE THE CASE. WHY NOT JULY? WHY NOT OCTOBER? DIDN'T HAVE TO BE THE CASE. BUT, NO, ALL THE HEAVY PRESSURE GOES ON THERE AND THEN THE COMMITTEE HAS TO MAKE A REALLY TOUGH DECISION IN THE MIDST OF A LOT OF FINANCIAL MARKET UPSET IN THE RUN UP TO THE MEETING. I DON'T LIKE THAT. I THINK IT SHOULD BE SMOOTHED OUT, YOU SMOOTH IT OUT BY MAKING EVERY MEETING EXACTLY THE SAME.

BULLARD ON OIL

THERES A REASONABLE CASE TO BE BUILT AROUND THAT THE INFLATION OUTLOOK IS SLIGHTLY WEAKER. BUT WE KNOW THAT THESE ARE TEMPORARY FACTORS, THE OIL FACTOR. AND THE THING ABOUT OIL IS ITS ULTIMATELY A BULLISH FACTOR FOR THE U.S. ECONOMY. WE'RE GOING TO BE ABLE TO BENEFIT, WE'RE A BIG OIL USER, WE'RE GOING TO BENEFIT FROM LOWER COMMODITY PRICES AROUND THE WORLD. SO I DON'T THINK YOU SHOULD BE CITING THAT AS, YOU KNOW, A SIGN OF SOMEHOW THAT IS GOING TO COME BACK TO BITE US.

BULLARD ON CHINA

WE HAVE STAFF ASSESSMENTS OF CHINA FROM WHAT I'VE SEEN, YOU KNOW, THE NUMBERS THAT CHINA IS REPORTING ARE ABOUT AS GOOD AS WHAT WE HAVE. OBVIOUSLY, IT'S NOT A VERY TRANSPARENT ECONOMY. THERE ARE CONCERNS ABOUT CHINA, BUT THERE HAVEN'T BEEN CONCERNS ABOUT CHINA FOR THE LAST TEN YEARS THAT THERE WOULD BE A HARD LANDING. IT DOESN'T SEEM ANY MORE IMMINENT RIGHT NOW THAN IT HAS BEEN IN THE PAST.

BULLARD ON FORECASTS

BULLARD: IN THIS ROUND OF FORECASTS, WE ACTUALLY MOVED UP OUR FORECAST FOR 2015 GROWTH.

JOE KERNEN: TO?

JAMES BULLARD: TO 2.5%.

KERNEN: AND THEN NEXT YEAR?

BULLARD: AND THEN NEXT YEAR 2.5 TO 3 OVER THE NEXT TWO YEARS. AGAIN, THIS IS IN AN ECONOMY THAT HAS A VERY LOW POTENTIAL GROWTH RATE. PROBABLY 2% OR EVEN A LITTLE BIT BELOW 2%. SO YOU'RE TALKING ABOUT ABOVE TREND GROWTH. SO BECAUSE OF THAT, IM EXPECTING CONTINUED IMPROVEMENT IN LABOR MARKETS NO MATTER WHAT WE DO. THIS IS ALL BAKED IN THE CAKE. I THINK UNEMPLOYMENT IS GOING TO GO DOWN INTO THE 4% RANGE, PROBABLY BELOW 4.5%. AND THESE OTHER ASPECTS OF LABOR MARKETS WILL JUST CONTINUE TO IMPROVE.

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