FED’s Bullard Sounding Dovish, Though Not as Dovish as You Might Expect

Bullard is the most dovish member of the FED. But he mentioned rate hikes today, instead of further cuts.

Written by: Skerdian Meta • Tuesday, October 15, 2019 • 1 min read

• Last updated: Tuesday, October 15, 2019

St Louis FED president James Bullard is the most dovish FED member. He was speaking in London a while ago and made some dovish comments, as you’d expect from him. Although, given that the FED has turned quite dovish recently and cut rates twice in the last two meetings, Bullard didn’t really sound that dovish. Here are his comments:

Decisions on future cuts will be meeting-by-meeting
Says trade policy uncertainty factors into calculation
Recent yield curve inversion was a warning sign
Sees risk of inflation staying too low
Sees risk of sharper-than-expected economic slowdown
Could reverse rate cuts (into rate hikes) in 2020, 2021 if economy improves again (Damn, Bullard implying rate hikes)
Zero rates, forward guidance, QE still in the playbook for “ordinary recession”

So, most of the comments are still as dovish as expected now that the US economy has weakened considerably. But, Bullard is not pushing for further rate cuts in the next meeting or in the coming months. Instead, he is implying that the FED might start hiking again if the economy reverses.

If US and China reach a deal, which is almost done, and the UK gets a Brexit deal again, then it’s very likely that the global economy might reverse soon and the FED might start hiking rates. Although, what’s certain now is that Bullard is not pushing for more rate cuts, which is a positive thing for the USD.

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.