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7/19, 12:07 PM (Source: TeleTrader)
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Bullard: Rate cut by 0.25 points is enough for July

Heightened trade conflict in the past two months and inflation's failure to reach the Federal Reserve's 2% goal led to the need for little lower borrowing costs, according to the president of the central bank's subsidiary in St. Louis. James Bullard told Wall Street Journal in an interview published on Friday that he has dissented at the last meeting and voted for an interest rate cut so that on July 30 and 31 policymakers could more easily assess whether more easing is appropriate. In the remarks from last week, he still said a standard move lower by 0.25 percentage points would be enough for the next update from the Federal Open Market Committee.

As Governor Richard Clarida and New York Fed chief John Williams both expressed the view yesterday that a preemptive rate cut at the sign of trouble eases economic pain. The latter's comments were talked down by his institution but market-based odds of an imminent half-point reduction in the benchmark range already jumped significantly.

In Bullard's view, such an "aggressive move" could be too much. He highlighted the radical shift in the stance of the rate-setters, who erased projections for any tightening this year. The panel will "maybe... do more in the future," the dovish central banker said.

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