Former St. Louis Fed President Jim Bullard Talks Basis Points
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News. Joining us now is someone who is very familiar with these types of speeches, St. Louis Fed President James Bullard, who recently was in the media talking about his preference for 100 basis points of rate cuts this year heading into 2026. Also a potential contender, I should say, to be the next Fed chair. James, Jim, how much are you seeing what we heard from Fed Chair Jay Powell and seeing anything different that you would really say if you were at that podium?
He used the speech to solidify expectations for 25 basis points in September. I was expecting that anyway. Markets were expecting that. He leaned into the most recent labor market report, which was very soft. And so I think that's a done deal. He didn't say too much about beyond that, what you want to do with the October meeting or the December meeting. I have set 100 basis points going into 2026. So I think you could adjust as you go forward and eventually get a full 100 basis points. But I would go slowly in order to watch the data. And then on the framework review, I'm sure Much earlier in the year, they had targeted that they would have the framework discussion and that they would use the Jackson Hole speech to talk about changes to the framework.
I thought those were thoughtful and they were well presented in this speech and they're about what many have speculated on. So I think they did about as much as they can on the framework side.
Jim Bowler, Tom Keenan, good morning to you. I definitely consider this my conversation of the day. You served a lengthy term at the St. Louis Fed. You have lived the decline of a greater economy decades and decades ago in the effort to provide for a resurgent St. Louis. Is the next chairman of the Fed, whoever that may be, do they have to manage for two American economies, a technology-driven, exceptional economy, and another, to use a cliché, America flat on their back? How would a chairman execute those two Americas?
Yeah, I think income and wealth distribution have become more salient topics for the Fed. It's not that clear how much the Fed can really do providing interest rate policy for the whole economy. If you change the rate structure, that affects everyone, not just one particular group that you might be. targeting. So I think that's been something we've had to wrestle with. And I've actually done research on it myself to try to understand it better from my point of view. So I think this has been a theme for a while, and that'll be an important theme in macroeconomics going forward.
Mike McKee's got a lot of smarter questions than me on the immediacy of this speech. I'm going to ask one more distant question, Jim Bollard. You're at Purdue executing online technology education every single day. How do you define the new technology productivity that America faces? Is it enough to save us? Is it enough to really add on to our present GDP?
Oh yeah, I think that the AI boom is, you know, it's a general purpose technology that will diffuse through the economy. I think the key question is how fast does that actually diffuse and sometimes markets can get ahead of themselves and think it's going to happen sooner.
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Chapters
6 chapters
1
What is the main topic discussed in this episode?
0:00–5:01
2
What did Jim Bullard say about expected Fed rate cuts this year?
5:01–7:26
3
How did Jay Powell’s Jackson Hole speech shift September and later meeting expectations?
7:26–10:48
4
Why does Bullard advocate 100 basis points of cuts heading into 2026 and how would they be paced?
10:48–15:58
5
How does Bullard view the Fed’s role in addressing distributional income and wealth effects?
15:58–23:49
6
What impact could AI and higher education adoption have on U.S. productivity growth?
23:49–24:17
Speakers
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