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
The fed and Gov have major problems. If trump pulls off another 4 years we will live in a different world come 2024.
Rates are already zero when figuring in the inflation, they are actually below neutral. Bullard must be a collage dropout.
The FED is in for a real surprise when bond yields rise, but the economy slows.
Rate cut?Rates are near zero lol,unless he’s talkin NIRP,cuttin rates is a waste pf time,and with inflation soaring only option left for the fed is keep pretending and of course………………..PRINT!
Nothing will work better than a de-centralized -currency- money system.
I’m a slow learner, but the Fed and it’s FOMC have made a believer out of me since 2008.
I see the likelihood of multiple rate cuts before year end at 100%.
The recession fat lady is warming up, but the plunge protection team is next door, once again, with gags and handcuffs.
I think we will end up with QE whatever and rates at zero or even negative.
The Fed firmly believes (mistakenly) that this has worked since 2009.
The acceptance of MMT is growing and we have no idea how badly this may end.
Next up helicopter money…MMT
Yup, it’s coming: zero rates, QE, MMT and /or UBI. You name it.
Please remind me why inflation is a good thing… I mean, a good thing for me and people like me…
It’s not. It’s good for leeches, who feed off of you and people like you. And, in financialized, progressive dystopias, those are the people who count.
Your designated role, is just to shut up, believe the children’s tales of scary hobgoblins the progressive propaganda machinery feeds you, and work harder. So that The Fed has more to steal on the leeches behalf.
“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.
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.
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”.
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.
And investment grade asset owners in the US
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?
Simple thinking says lower rates will stimulate borrowing for business growth, pushing supply & demand in favor of higher prices. What these simple thinkers forget is the impact of confidence on this equation. Rates could be at 10%, as long as businesses have confidence in making a margin; or rates can be 2%, but businesses won’t borrow if there is not confidence to making the needed margin. This is why QE has not worked. Instead, the banks park the money back at the Fed, and companies buy back their stock.
The scary thing is the real dirt and corruption behing the establishment fraud has not even reached the average Joe. When this happens (2020-2022), confidence will plunge.
Companies always charge the most that they can for their products based on a sensitivity analysis.
If your logic holds then when apple started making product in asia they would have lowered their prices. They didnt, they just absorbed more profit.
Are you saying there’s no correlation between production costs and retail costs?
All things being equal, doesn’t competition increase as the cost of production decreases?
Many factors can prevent competiton. Intellectual propery rights being one that Apple uses. There are many other ways. Direct competition only occurs with commodities and even then most companies angle to prevent that through a variety of means, if they can.
Lower rates makes it cheaper to borrow. Hence people and institutions borrow more. Hence have more money with which to demand stuff. Hence demand is increased. Which, since supply remains fixed, increases prices.
You can make a counter argument that lower rates put less money in savers pockets. Hence they have less money, etc…
Lowering rates doesn’t make money magically appear.