Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Joining US now is former Saint Louis FED President Jim Bullard,
Speaker 2: one of the potential candidates President Trump is considering for
Speaker 2: FED chair. Jim, great to talk to you, or Dean,
Speaker 2: I should probably address you by your title, Dean of
Speaker 2: the Purdue University School of Business. I got to first
Speaker 2: ask you your take on rates. Considering the shape the
Speaker 2: United States economy is in, do we need a fifty
Speaker 2: basis point rate cut at the next meeting.
Speaker 3: I've seen one hundred basis points over the next as
Speaker 3: we go into twenty twenty six, so I think you
Speaker 3: could get started on that path. I think fifty sounds panicky,
Speaker 3: sounds like the administration wouldn't be that confident in their
Speaker 3: economic program, which I don't think is the right stance
Speaker 3: to take here. I think they've got a pro business
Speaker 3: program that will fire up the economy after we get
Speaker 3: through the initial phase of the new tariff policies, which
Speaker 3: is slowing down the global economy, but eventually very strong
Speaker 3: growth in the US economy, and monetary policy has to
Speaker 3: be looking ahead and anticipating that. I do think the
Speaker 3: policy rates high, but.
Speaker 4: The committee is going to probably lower in September.
Speaker 3: Here you could speed up the pace of reduction if
Speaker 3: the data cooperates as we go through the rest of
Speaker 3: the year and into twenty twenty six.
Speaker 1: Well, tell us what parts of the economy need a
Speaker 1: rate cut at this moment. We were just talking with Mike
Speaker 1: McKee about how FED officials too have been saying that
Speaker 1: rates look restrictive here. We're not at neutral necessarily when
Speaker 1: we're north of four percent. Where do we really need
Speaker 1: those rate cuts?
Speaker 3: Well, I just think you would want to be at
Speaker 3: neutral if you felt in play was coming down to
Speaker 3: two percent. That's why I've suggested that we can get
Speaker 3: one hundred basis points lower.
Speaker 4: But you know, you're.
Speaker 3: Looking through this inflation that's still CPI core is still
Speaker 3: up around three percent.
Speaker 4: You're looking through that.
Speaker 3: But still you want to get confirmation that inflation is
Speaker 3: actually coming down to target in the way that you
Speaker 3: would like. And so you don't want to be too
Speaker 3: aggressive because you might have to you might get burned
Speaker 3: by the data, as the Committee did last year.
Speaker 4: So I think.
Speaker 3: You know you want to get on this pay path
Speaker 3: toward neutral, and you want to keep watching the data,
Speaker 3: especially on inflation, and if inflation comes in, you know,
Speaker 3: too high or starts going up again, that would be
Speaker 3: the main thing that would disrupt the the growth agenda
Speaker 3: for the US. So I don't think you want to
Speaker 3: get into that hot water if you don't have Well.
Speaker 5: Jim, we're talking to you because you are, of course
Speaker 5: on the list of people being considered to be the
Speaker 5: next FED chair, and you confirmed you had talked to
Speaker 5: folks at Treasury. What else you can tell us about
Speaker 5: the interview process and the process of choosing a new
Speaker 5: FED chair. You've obviously passed the first test, which is
Speaker 5: you say rates need to be cut. What else do
Speaker 5: they want to see in a new chairman?
Speaker 3: I did talk to the Treasury Secretary relatively briefly. We
Speaker 3: did not go through, you know, ideas about what was
Speaker 3: required or job requirements or anything like that. I was
Speaker 3: under the impression that the process is still under construction
Speaker 3: for interviewing all these candidates, and you know, at that
Speaker 3: point we can discuss in more details. So I just
Speaker 3: said that I'd be happy to participate in that process.
Speaker 2: I wonder what the process looks like. Can you tell
Speaker 2: us any of the details. Have you met with anybody?
Speaker 2: Do you have meeting scheduled.
Speaker 4: I do not, but that's why I say that.
Speaker 3: I think this is all under construction, so we'll see
Speaker 3: how they want to design it, and I'm sure it'll
Speaker 3: be a good process. I would say this is a
Speaker 3: credible list of candidates. I know almost all these people.
Speaker 3: I think this is a very sharp group, and many
Speaker 3: of these people would do a fantastic job.
Speaker 1: Yeah. Absolutely, a list of heavy hitters there, including yourself. Now,
Speaker 1: you said on CNBC this week that you would accept
Speaker 1: the job of leaving the FED if the institution's independence
Speaker 1: is respected. Plenty of people would say that what we're
Speaker 1: seeing right now is not respect What did you mean
Speaker 1: by that? What is respecting the independence of the FED
Speaker 1: look like to you?
Speaker 4: Yeah?
Speaker 3: I mean the FED is where it is because of
Speaker 3: the Federals IRV Act, and the Committee does what it
Speaker 3: does because of the Federal Reserve Act. So if you know,
Speaker 3: you have to do all this under existing law, and
Speaker 3: if you want to change the law, the Congress can
Speaker 3: certainly come in and do that. But Congress has looked
Speaker 3: at the Federal Reserve Act six ways from Sunday, and
Speaker 3: they keep coming up with the idea that, hey, this
Speaker 3: is this is a pretty good way to do it.
Speaker 3: So it's it's a complicated system. It is done by committee,
Speaker 3: it is at arms length from day to day politics.
Speaker 3: But that's the way it is, and I think that's
Speaker 3: the way it's going to be going forward, because I
Speaker 3: don't think Congress is in the mood to change that.
Speaker 3: So I think, you know, we have to respect that
Speaker 3: and we have to make these decisions under the law.
Speaker 5: Well, speaking of changes, a number of people on the
Speaker 5: list that the administration is considering have suggested they want
Speaker 5: to make some major changes in the way the FED operates,
Speaker 5: and the President has suggested he'd like to see major
Speaker 5: changes in the way the FED operates. If you were
Speaker 5: to become chair, what would you change about the FED?
Speaker 3: Well, I've been outspoken over the years about various aspects.
Speaker 3: I do think that the FED is a research powerhouse.
Speaker 3: I think we could make more use of the various
Speaker 3: ideas that are proposed around the around the nation from
Speaker 3: the FED, and we could you know, break up the
Speaker 3: group think a little bit more than what it has
Speaker 3: been in the last few years. I think there's a
Speaker 3: lot of emphasis on Philip's curve. I'm thinking I've often
Speaker 3: said that I think that the evidence for that is
Speaker 3: not very good, or if to the extent there is
Speaker 3: even evidence, it's very muted. And so that story, that
Speaker 3: Phillips curve type story gets emphasized too much in financial
Speaker 3: markets and too much in policymaker's mind.
Speaker 4: I try to break out of that a little bit.
Speaker 3: And emphasize the role of expectations a little bit more,
Speaker 3: and so there'd be more forward lookingness than probably what
Speaker 3: we have today.
Speaker 2: And Dean Bullard, does it concern you when you know
Speaker 2: the President and his allies disagree with Jerome Powell's monetary
Speaker 2: policy views, so they start looking into things like renovation
Speaker 2: costs at the FED, or when the President disagrees with
Speaker 2: the numbers coming out of the Bureau of Labor and
Speaker 2: Statistics and so he simply fires the chief statistician there.
Speaker 2: Does that concern you? Yeah?
Speaker 3: I think the President put up a new candidate for
Speaker 3: BLS who's who I think will be pretty credible.
Speaker 4: So it looks to me like that issues maybe behind us.
Speaker 3: I do think that the nation as a whole does
Speaker 3: not have as good of economic data as we could,
Speaker 3: even though we're better than most other countries.
Speaker 4: You know, you think about it.
Speaker 3: Omark knows it's one point six million employees or something
Speaker 3: like that. They know their inventory in real time, They
Speaker 3: know their pricing in real time for all those stores
Speaker 3: all over the country and all over the world. Why
Speaker 3: are we getting a retail sales report once a month.
Speaker 4: That's kind of sketchy, you know. Why can't that all
Speaker 4: be done a lot better?
Speaker 3: So I think I think to the extent that information
Speaker 3: is important for how financial markets operate and how policy operates,
Speaker 3: we could do much better than we do today in
Speaker 3: making sure that we have the right information available so
Speaker 3: we make good decisions.
Speaker 5: If you did end up in the chair, obviously you
Speaker 5: could be the target of the president's truth social account
Speaker 5: when you look at what he has said about J.
Speaker 5: Powell and others on the FED, do you think the
Speaker 5: criticism has been fair?
Speaker 3: Yeah, I mean, I think the president can espouse his
Speaker 3: views as he often does on monetary policy, just like
Speaker 3: all the other politicians that like to talk about monetary
Speaker 3: policy on both sides of the aisle, and so I
Speaker 3: just don't see any reason why you can say that
Speaker 3: the president can't do that. A lot of presidents haven't
Speaker 3: done that, but I don't think they maybe wanted to
Speaker 3: take that on, or they didn't feel that they wasn't
Speaker 3: their style, or they didn't feel as confident in talking
Speaker 3: about the economy as President Trump does know he's got
Speaker 3: a lot of experience in a very intra sensitive industry,
Speaker 3: and so he thinks and all the people I've ever
Speaker 3: been in real estate always want lower.
Speaker 4: Interest rates because that's the way the industry works.
Speaker 3: It is a little different from public policy perspective because
Speaker 3: you've got the inflation component there they might feed into
Speaker 3: if you go too far, too fast. And so I
Speaker 3: think the role of the FED chair is to guide
Speaker 3: that process and make sure that we've got good outcomes
Speaker 3: for the Call.
Speaker 1: Me all right, Dean Bullard, we really appreciate your time.
Speaker 1: We're eager to have you back soon. That is Purdue
Speaker 1: University School of Business dean and former Saint Louis FED
Speaker 1: President Jim Bullard.