May 3, 2019
St. Louis Fed President James Bullard shared his views on U.S. monetary policy, inflation and inflation expectations, the latest jobs report, his outlook for GDP growth in 2019, and the Fed’s dual mandate during an interview with CNBC on May 3.
He noted that since early January, there has been a sea change in U.S. monetary policy, which has altered the structure of interest rates. He cited the 10-year Treasury yield, which has declined by about 0.75 percentage point since last fall.
“We’ve made a big move in monetary policy over the last three or four months, and I think it’s time to wait and see how that’s going to impact the economy going forward,” he said.
On inflation, he noted that core PCE inflation is only 1.6% and that inflation expectations are also a little on the low side. “I would like to … take this opportunity to re-center inflation expectations at 2%,” he said, adding, “I think that would pay handsome dividends for the Fed going forward.”
Bullard also shared his thoughts on having a single mandate for inflation instead of a dual mandate for maximum sustainable employment and price stability. He noted that he has supported a single mandate for the Fed in the past. “I don’t think actual policy would change very much. We would still react to the economy and everything, but it would clarify in people’s minds that the only thing the Fed can do over the medium term is try to control the inflation rate,” he explained.
Having trouble with the video? Watch it here »