Skip to main content

St. Louis Fed Chief Hints at Rate Cut

Phil Hall
Jun 04, 2019
Photo credit: Getty Images/michaelquirk

Federal Reserve Bank of St. Louis President James Bullard raised the possibility that the nation’s central bank will drop a rate cut later this year if the economy sails into choppy waters.
 
Speaking yesterday before the Union League Club of Chicago in a presentation titled “Remarks on the Current Stance of U.S. Monetary Policy,” Bullard suggested a cut in the Federal Open Market Committee’s (FOMC) policy rate could occur if ongoing global trade disputes contribute to slower U.S. economic growth.
 
“The FOMC faces an economy that is expected to grow more slowly going forward, with some risk that the slowdown could be sharper than expected due to ongoing global trade regime uncertainty,” he said. “In addition, both inflation and inflation expectations remain below target, and signals from the Treasury yield curve seem to suggest that the current policy rate setting is inappropriately high. A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown.”
 
Bullard added that U.S. real GDP has been growing at a 3.2 percent pace over the last year, but this year’s growth is expected to be slower.
 
“To the extent global trade uncertainties have become more severe, this slowing may be sharper than previously anticipated,” he said, noting that actual and market-based inflation expectations were below the FOMC’s two percent inflation target. “This is occurring despite more than two years of upside surprise in the U.S. real economy. This is clearly concerning for the credibility of the inflation target.”
 
Bullard’s presentation avoided mentioning the repeated pressure by President Trump to have the Federal Reserve slash interest rates. The Fed has hiked rates nine times December 2015 and Chairman Jerome Powell, a Trump appointee, has repeatedly given the impression that there will be no further rate hikes this year. The Fed set the current benchmark interest rate in a range between 2.25 percent and 2.5 percent.

 
Published
Jun 04, 2019
Nations Lending Opens Another Branch In Arizona

New Scottsdale branch welcomes Arizona native Christine McConnell as lead personal mortgage advisor.

Industry News
Sep 26, 2022
Nominations Open For Industry Titans Award

NMP Magazine to honor people who represent industry with professionalism.

Industry News
Sep 23, 2022
Fidelity National Names New HR Chief

Melissa Circelli previously held same position at Black Knight.

Industry News
Sep 23, 2022
Ruoff Mortgage Lays Off Nearly 5% Of Staff

Company announced the layoffs Sept. 16, citing 'economic conditions.'

Career
Sep 21, 2022
SPS Acquires Rushmore Loan Management Services

The acquisition will include hiring Rushmore servicing personnel and assuming Rushmore servicing contracts.

Industry News
Sep 19, 2022
Fannie Mae Names New EVP, Chief Risk Officer

Former Morgan Stanley exec has nearly 30 years of risk management experience.

Industry News
Sep 15, 2022