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Bullard says Fed may cut rates if inflation keeps disappointing

EURUSD News by Newsroom on 12:50 May 22, 2019 EST

James Bullard, President of the Federal Reserve Bank of St Louis said on Wednesday that further weakness in inflation could prompt the U.S. Federal Reserve to cut interest rates.

The risk of the Fed missing its 2per cent inflation target and the trade war were two key macroeconomic challenges to the policy-setting Federal Open Market Committee (FOMC), he said in a presentation in Hong Kong.

The Fed held interest rates steady earlier in May, when Chairman Jerome Powell said there was "no strong case" for either a cut or hike in interest rates.

" Adownward policy rate adjustment even with relatively good real economic performance may help maintain the credibility of the FOMC's inflation target going forward" he also added.

Bullard said any policy adjustment going forward would be in response to incoming data, and not a continuation of the rate normalization process which has stopped earlier this year after 225 basis points worth of hikes from near zero levels.

He remained upbeat about growth prospects.




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