Bullard Yaps About Too Little Inflation and the Need for Rate Cuts

-edited

St Louis Fed President James Bullard is yapping mightily today about the need for rate cuts.

In a speech to the Union League of Chicago, James Bullard made Remarks on the Current Stance of U.S. Monetary Policy.

Bullard noted that the U.S. economy is expected to grow more slowly going forward, with some risk that the slowdown could be sharper than expected due to ongoing global trade regime uncertainty.

“In addition, both inflation and inflation expectations remain below target, and signals from the Treasury yield curve seem to suggest that the current policy rate setting is inappropriately high,” he said.

Bullard concluded: “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.”

Group-Think Illiterates

These group-think economic illiterates do not understand inflation one bit.

They blow asset bubbles, which they do not count as inflation, then when the bond market signal asset prices are on the verge of collapse, they get concerned.

Inflation isn't too low, asset bubbles are too big.

The bond market message is simple: Don't blow asset bubbles unless you want another round of destructive asset deflation. For the third time since 2000, the Fed missed the message.

The Fed does not even see the current bubbles and won't until they break hard.

Mike "Mish" Shedlock

Comments (26)
No. 1-14
KidHorn
KidHorn

How does lowering interest rates increase inflation outside of maybe cars and housing? If companies can borrow at lower rates, wouldn't that allow them to charge less for their products?

Blacklisted
Blacklisted

The bigger problem is debt levels outside the US, much of which is dollar-based. Lower rates and lower dollar delays this implosion. The story is the Fed is listening to the IMF and foreign entities instead of pensioners and savers.

Bam_Man
Bam_Man

When the "Bulltard" or any of the other Fed mouthpieces start yapping about inflation being too low, it usually corresponds with a drop in the stock market and/or house prices. What he really means is "ASSET inflation is too low".

LawrenceBird
LawrenceBird

ZIRP did little, if anything, to change the inflation measures the Fed prefers. So why lower again? Growth is still above zero (perhaps in part because of the understated deflator) so why go into panic mode now? Have to say the 'booms' and 'busts' of the 50-80s are preferrable to the flatline we have today.

Bam_Man
Bam_Man

"Greatest economy ever" (3+% GDP growth, anyway), unemployment at 3.8%, initial jobless claims at a 50-year low and you have a Fed mouthpiece talking about the need for rate cuts. Unbelievable.