Bloomberg Audio Studios, podcasts, radio news.
Joining US now is former Saint Louis FED President Jim Bullard, one of the potential candidates President Trump is considering for FED chair. Jim, great to talk to you, or Dean, I should probably address you by your title, Dean of the Purdue University School of Business. I got to first ask you your take on rates. Considering the shape the United States economy is in, do we need a fifty basis point rate cut at the next meeting.
I've seen one hundred basis points over the next as we go into twenty twenty six, so I think you could get started on that path. I think fifty sounds panicky, sounds like the administration wouldn't be that confident in their economic program, which I don't think is the right stance
to take here. I think they've got a pro business program that will fire up the economy after we get through the initial phase of the new tariff policies, which is slowing down the global economy, but eventually very strong growth in the US economy, and monetary policy has to be looking ahead and anticipating that. I do think the policy rates high, but.
The committee is going to probably lower in September.
Here you could speed up the pace of reduction if the data cooperates as we go through the rest of the year and into twenty twenty six.
Well, tell us what parts of the economy need a rate cut at this moment. We were just talking with Mike McKee about how FED officials too have been saying that rates look restrictive here. We're not at neutral necessarily when we're north of four percent. Where do we really need those rate cuts?
Well, I just think you would want to be at neutral if you felt in play was coming down to two percent. That's why I've suggested that we can get one hundred basis points lower.
But you know, you're.
Looking through this inflation that's still CPI core is still up around three percent.
You're looking through that.
But still you want to get confirmation that inflation is actually coming down to target in the way that you would like. And so you don't want to be too aggressive because you might have to you might get burned by the data, as the Committee did last year.
So I think.
You know you want to get on this pay path toward neutral, and you want to keep watching the data, especially on inflation, and if inflation comes in, you know, too high or starts going up again, that would be the main thing that would disrupt the the growth agenda for the US. So I don't think you want to get into that hot water if you don't have Well.
Jim, we're talking to you because you are, of course on the list of people being considered to be the next FED chair, and you confirmed you had talked to folks at Treasury. What else you can tell us about the interview process and the process of choosing a new FED chair. You've obviously passed the first test, which is you say rates need to be cut. What else do they want to see in a new chairman?
I did talk to the Treasury Secretary relatively briefly. We did not go through, you know, ideas about what was required or job requirements or anything like that. I was under the impression that the process is still under construction for interviewing all these candidates, and you know, at that point we can discuss in more details. So I just said that I'd be happy to participate in that process.
I wonder what the process looks like. Can you tell us any of the details. Have you met with anybody? Do you have meeting scheduled.
I do not, but that's why I say that.
I think this is all under construction, so we'll see how they want to design it, and I'm sure it'll be a good process. I would say this is a credible list of candidates. I know almost all these people. I think this is a very sharp group, and many of these people would do a fantastic job.
Yeah. Absolutely, a list of heavy hitters there, including yourself. Now, you said on CNBC this week that you would accept the job of leaving the FED if the institution's independence is respected. Plenty of people would say that what we're seeing right now is not respect What did you mean by that? What is respecting the independence of the FED look like to you?
Yeah?
I mean the FED is where it is because of the Federals IRV Act, and the Committee does what it does because of the Federal Reserve Act. So if you know, you have to do all this under existing law, and if you want to change the law, the Congress can certainly come in and do that. But Congress has looked at the Federal Reserve Act six ways from Sunday, and they keep coming up with the idea that, hey, this is this is a pretty good way to do it.
So it's it's a complicated system. It is done by committee, it is at arms length from day to day politics. But that's the way it is, and I think that's the way it's going to be going forward, because I don't think Congress is in the mood to change that. So I think, you know, we have to respect that and we have to make these decisions under the law.
Well, speaking of changes, a number of people on the list that the administration is considering have suggested they want to make some major changes in the way the FED operates, and the President has suggested he'd like to see major changes in the way the FED operates. If you were to become chair, what would you change about the FED?
Well, I've been outspoken over the years about various aspects. I do think that the FED is a research powerhouse. I think we could make more use of the various ideas that are proposed around the around the nation from the FED, and we could you know, break up the group think a little bit more than what it has been in the last few years. I think there's a
lot of emphasis on Philip's curve. I'm thinking I've often said that I think that the evidence for that is not very good, or if to the extent there is even evidence, it's very muted. And so that story, that Phillips curve type story gets emphasized too much in financial markets and too much in policymaker's mind.
I try to break out of that a little bit.
And emphasize the role of expectations a little bit more, and so there'd be more forward lookingness than probably what we have today.
And Dean Bullard, does it concern you when you know the President and his allies disagree with Jerome Powell's monetary policy views, so they start looking into things like renovation costs at the FED, or when the President disagrees with the numbers coming out of the Bureau of Labor and Statistics and so he simply fires the chief statistician there. Does that concern you? Yeah?
I think the President put up a new candidate for BLS who's who I think will be pretty credible.
So it looks to me like that issues maybe behind us.
I do think that the nation as a whole does not have as good of economic data as we could, even though we're better than most other countries.
You know, you think about it.
Omark knows it's one point six million employees or something like that. They know their inventory in real time, They know their pricing in real time for all those stores all over the country and all over the world. Why are we getting a retail sales report once a month.
That's kind of sketchy, you know. Why can't that all be done a lot better?
So I think I think to the extent that information is important for how financial markets operate and how policy operates, we could do much better than we do today in making sure that we have the right information available so we make good decisions.
If you did end up in the chair, obviously you could be the target of the president's truth social account when you look at what he has said about J. Powell and others on the FED, do you think the criticism has been fair?
Yeah, I mean, I think the president can espouse his views as he often does on monetary policy, just like all the other politicians that like to talk about monetary policy on both sides of the aisle, and so I just don't see any reason why you can say that
the president can't do that. A lot of presidents haven't done that, but I don't think they maybe wanted to take that on, or they didn't feel that they wasn't their style, or they didn't feel as confident in talking about the economy as President Trump does know he's got a lot of experience in a very intra sensitive industry, and so he thinks and all the people I've ever been in real estate always want lower.
Interest rates because that's the way the industry works.
It is a little different from public policy perspective because you've got the inflation component there they might feed into if you go too far, too fast. And so I think the role of the FED chair is to guide that process and make sure that we've got good outcomes for the Call.
Me all right, Dean Bullard, we really appreciate your time. We're eager to have you back soon. That is Purdue University School of Business dean and former Saint Louis FED President Jim Bullard.