Former St. Louis Fed President Jim Bullard discusses potential Fed rate cuts, envisioning rates at 3.5% with 10-year yields at 4.5%. Topics include debates on monetary policy, election influence on Fed decisions, historical interest rate trends, economic potential of the Midwest, and skilled labor availability in America.
Jim Bullard predicts two rate cuts by the Fed this year, aiming for an ultimate federal funds rate of 3.5% and 10-year Treasury yields at 4.5%.
Transition post-pandemic involves higher nominal interest rates and inflation, aiming to move away from low rate, low inflation periods towards a 2% target.
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Shift in Economic Regimes
Jim Bullard discusses a shift in economic regimes post-pandemic, moving towards higher nominal interest rates and inflation. Comparisons are drawn to past economic periods, highlighting the need to transition from low interest rate, low inflation regimes observed previously. The goal is to achieve a gradual reduction in inflation towards the 2% target.
Impact of Inflation on Consumers
Inflation has varying effects on consumers, with lower-income groups experiencing greater challenges. The rise in prices impacts individuals differently, with some benefitting from asset appreciation, while others struggle with increased living costs. Measures to address inflation's impact on income distribution are crucial in economic policy considerations.
Former St. Louis Fed President and dean of Purdue University’s business school Jim Bullard says he envisions two rate cuts from the Fed this year and the federal funds rate ultimately trading around 3.5% with 10-year Treasury yields at 4.5%. He speaks with Bloomberg's Tom Keene and Paul Sweeney