An interest rate cut may be warranted soon, Fed's Bullard says
The head of the Federal Reserve bank of St. Louis, James Bullard, believes a reduction in short-term official interest rates may be "warranted soon", even if only as insurance against a sharper-than-expected slowdown in the economy.
In remarks prepared for a speech on Monday, regional Fed chief James Bullard said: "A downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown.
"[...] Financial markets appear to expect less growth and less inflation going forward than the FOMC does, a signal that the policy-rate setting may be too restrictive for the current environment.
And echoing at least some other economists, Bullard said that while the direct impact of trade tariffs on America's economy might be "relatively small", their impact via financial markets "may be larger".
"Even if the sharper-than-expected slowdown does not materialize, a rate cut would only mean that inflation and inflation expectations return to target more rapidly."