By Steven K. Beckner
LOUISVILLE (MaceNews) – St. Louis Federal Reserve President James Bullard, one of those who has pressed most eagerly for lower interest rates this year, strongly suggested Thursday that he is comfortable with where U.S. monetary policy is now and for the foreseeable future.
Even if economic data were to come in “weaker than expected,” it would “not necessarily” warrant an additional rate cut, Bullard said in response to a question from Mace News.
That’s because the Fed has already been “preemptive” this year, he told reporters following a luncheon address to the Louisville Rotary Club.
Not only has the Fed cut the federal funds rate three times, reversing 3/4 of last year’s rate hikes, but the central bank has executed a “major” easing of credit much larger than suggested by actual rate cuts.
Bullard said the Fed’s actions have has brought monetary policy more in line with market expectations for growth and inflation.
The first senior Fed official to sound alarms about a flat to inverted US Treasury yield curve called the recent swing to a positive yield curve a “comforting signal.”
If global and domestic economies get out of their current slowdown, about which he describes himself as “optimistic,” Bullard said the Fed will “take back” some or all of its rate cuts.
At the same time, Bullard echoed others in pointing to downside risks and trade policy uncertainties, which he said have hurt manufacturing and business investment.
He also voiced concern about low inflation and inflation expectations, although he said Fed actions should “re-center” expectations for inflation. He was much more upbeat about labor markets and in turn consumption.