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Bullard Discusses Monetary Policy, Inflation, U.S. Growth on Bloomberg

June 25, 2019

St. Louis Fed President James Bullard discussed his dissenting vote at the FOMC’s June meeting and why he preferred a 25 basis point cut in the Fed’s policy rate instead of no change. During his interview with Bloomberg, he also shared his views on the U.S. economic outlook, low inflation and inflation expectations, the Fed’s monetary policy framework review, the yield curve, productivity growth, the global economy and other topics.

Bullard was interviewed by Bloomberg’s Kathleen Hays. The full interview aired on Bloomberg Radio (listen to the full interview here).

Part of the interview also aired on Bloomberg’s Balance of Power, and the full show from June 25 can be found here. (Bullard’s interview begins about 10 minutes into the video.)

Part 1: FOMC Dissent

In explaining why he cast a dissenting vote at last week’s FOMC meeting, Bullard noted that inflation is running below the Fed’s 2% target and inflation expectations have declined. In addition, he cited an expected slowdown in growth and an inverted yield curve.

“It seemed to me like this was a good chance to make an insurance rate cut and try to re-center inflation and inflation expectations back at the 2% target,” he said during this segment.

(For additional information, see President Bullard Explains His Recent FOMC Dissent, Federal Reserve Bank of St. Louis On the Economy blog, June 21, 2019.)

Part 2: Interest Rates

Asked about the possibility of a 50 basis point cut in the policy rate at the July FOMC meeting, Bullard said, “I don’t think the situation really calls for that.”

He noted that U.S. economic growth is expected to slow down in the second half of this year. He also noted that inflation and inflation expectations are running low. “We’d like to push those up back toward 2%. I don’t think we have to take huge action in order to get this,” he said during this segment. “This is more in the realm of insurance, in the realm of ordinary adjustments to monetary policy that you should be making to be sensitive to market developments.”

Part 3: Data Dependent

Regarding his dissent, Bullard said, “We try to make the best decisions we can based on the data we have, and this is my judgment.”

Later in this segment, he said, “There’s been a sea change in U.S. monetary policy. I just want to play this as well as we can to keep the expansion going.”

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Watch part one.
Watch part two.
Watch part three.