The hawks were out ahead of Jerome Powell’s August 23 Jackson Hole speech (which, despite the furious response from Donald Trump, was actually somewhat dovish) and the reluctance from Esther George and Eric Rosengren to repent and countenance market expectations for easing put some folks on edge.
The market will hear from a bevy of Fed officials this week, including Powell, ahead of the quiet period before the September FOMC. On Tuesday afternoon, following a rough day on Wall Street that saw stocks sink on trade woes and the first contractionary ISM manufacturing print in three years, Jim Bullard was on the tape calling for a 50bps cut this month.
“We should have a robust debate about moving 50 basis points at this meeting…It’d be better in my mind to go ahead and get realigned right now”, Bullard said, expressing a preference for “going big” as opposed to cutting 25bps this month and then another 25bps in October.
“We are too high”, he told Reuters, in an interview that found the notorious dove lamenting a policy rate that’s above the entire curve.
“[He complained] that the central bank’s current target policy rate of between 2% and 2.25% was higher than the current yield of all US Treasury securities”, Reuters writes, describing Bullard’s mood.
Last month, during an interview with Fox, Bullard played down the idea that market conditions warranted any kind of emergency action.
Reuters goes on to note that “while central bankers often say they don’t let financial markets dictate policy”, Bullard said Tuesday that “in this situation I would respect the market signal”.
If that sounds familiar, it should. On December 18, just ahead of what many believe was one hike too many, Trump implored the Fed to “feel the market”.
“I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake”, the president chided. “Feel the market, don’t just go by meaningless numbers. Good luck!”, he added.
Nine months later, somebody is finally listening – and nobody is surprised it’s Bullard.