James Bullard, president of the Federal Reserve St. Louis.
Adam Jeffery | CNBC
St. Louis Federal Reserve Bank President James Bullard said he argued for a deeper rate cut than his colleagues approved earlier this week because he fears that the economy is slowing and manufacturing “already appears in recession.”
The policymaking Federal Open Market Committee on Wednesday approved a 25 basis point cut that took the target range for the central bank’s overnight borrowing rate to 1.75% to 2%.
Bullard said in a note that the committee should have one further to a 50 basis point reduction.
He said “there are signs that U.S. economic growth is expected to slow in the near horizon. Trade policy uncertainty remains elevated, U.S. manufacturing already appears in recession, and many estimates of recession probabilities have risen from low to moderate levels.”
“In my view, lowering the target range by 50 basis points to 1.50%-1.75% would have been a more appropriate action,” he wrote.
Bullard said economic growth is expected to slow in the near term and that President Donald Trump’s “trade policy uncertainty remains elevated.” He added that the probability of an economic recession has increased, noting the inversion of the bond yield curve.
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