James Bullard, president of the St. Louis Federal Reserve, is expected to vote again for a quarter-point rate cut when the central bank meets at the end of the month, a decision announced Wednesday and recently.
And Bullard is expected to push for a further quarter-point cut by the end of the year, provided the economic conditions do not change much, he said in an appearance. at the University of Washington in St. Louis.
In June, Bullard dissociated itself from the Fed 's decision to maintain rates and pronounced in favor of a quarter point rate reduction at the end of the year. time. In an interview with Bloomberg around the same time, he had stated that a quarter point reduction would be a wise choice when it comes to insurance. But Bullard said he did not see the need for a half-point reduction in a single action.
Such "insurance" against signs of slowing global trade-related growth is still needed, although he does not like to "prejudge a meeting," Bullard said Wednesday. According to Bullard, it is also important to "refocus" inflation expectations as the economy has continued to turn, with inflation below the Fed's target of 2%. The Fed will meet July 30-31.
"The whole world situation has an impact on my decision-making," Bullard said. "European data has been disappointing in the second half of 2018 and the first half of 2019 … Germany has been hit especially by the global trade war."
After a question about the type of commercial resolution that might dispel this lingering concern, Bullard said that when the world was moving towards free trade, the issue was rarely raised as a "mantra" of political decision-making or market discussion. Trade may be a major concern in the United States and may influence business decision-making, but it is more important externally, fueling fears of a global slowdown that could lead to a more pronounced slowdown than expected in the world. United States ".
Fed Chairman Jerome Powell also expressed his concerns when he told Congress Wednesday that the US economy was suffering from a period of uncertainty caused by tensions. and slowing global growth. request.
The stock market
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what investors judged dovish Powell and which remained on the rise while Bullard spoke.
Bullard was asked whether the Fed should foresee political surprises for the stock and bond market to fuel more regular ups and downs, and whether the markets had become too complacent to let themselves be saved. by an easy monetary policy, a so-called Powell Put. "In the [former Fed Chairman Paul] At the time of Volcker, some would advocate surprising markets. We are not at that time … there is a lot of uncertainty … you do not want to add any more … ", he said.
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The Fed was a favorite target of President Trump and Bullard in June, saying he had been approached by White House officials "in recent months" about the possibility of serving on the board of governors from the Fed.
Bullard called the talks "exploratory by nature". He told the Trump administration that he was pleased with his current position and that he was currently a member of the Fed's rate-setting committee. But he refused to provide more details or specify the moment of his last contact.
Bullard said on Wednesday that the real estate business of the president allowed him to become familiar with interest rates.
«Every real estate [professional] I always met for lower interest rates … all politicians too. "
But this external discussion will not deflect the Fed from its stated goals of stable inflation and low unemployment. "We are doing our jobs well. It's a committee that has made very good calls over the past two years, "Bullard said.
The Trump administration is now interested in Christopher Waller, head of research at the St. Louis Fed.
Journalists asked Bullard Wednesday that, if Trump's interest in Waller became more official and finally approved, would he be likely to defend the more flexible interest rate policy for which Trump had been so outspoken?
"Chris will be his own person," Bullard said. "If he is lucky to be awarded this prestigious position … our views are close, but he will have his."