Former Fed president James Bullard expects three rate cuts
Former Federal Reserve Bank of St. Louis President James Bullard said he’s expecting three interest-rate cuts this year as inflation moves toward the central bank’s target while the economy remains resilient.
“At this point, you should probably take the committee and chair at face value — their best guess right now is still three cuts this year,” Bullard said Tuesday in a Bloomberg TV interview with Haslinda Amin. “That’s the base case.
“You’re looking at a very successful policy with a pretty strong economy, so a lot of things going right for the Fed right now,” he said on the sidelines of HSBC’s Global Investment Summit in Hong Kong. Economic data already justifies a rate cut, he added.
Bullard’s outlook echoes the Fed’s messaging on monetary policy this year but contrasts with growing market expectations for fewer cuts. Investors have boosted bets that two rate cuts are more likely than three this year following a blowout March payrolls report.
Treasury yields reached their highest levels of the year Monday as traders pushed back expectations for when the Fed will act. Swap contracts priced in around 60 basis points of easing this year beginning in September, a view that assigns less than 50% odds to a third cut in 2024.
Bullard, who left the St. Louis Fed last year to become dean of Purdue University’s business school, was the longest-serving regional Fed president and known for his contrarian takes. While in office, he notably advocated for more aggressive policy action to rein in what was at the time accelerating inflation.
Speaking on stage at the summit, Bullard said a soft landing for the US economy is moving into view. He cited the fall in core personal consumption expenditure data, the Fed’s preferred gauge of
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