Federal Reserve "hawk" is gone: St. Louis Fed President Bullard resigns

A "hawkish" member of the Federal Reserve's decision-making body has left.

On Thursday, July 13, Eastern Time, the St. Louis Fed website announced that James Bullard has resigned as the president of the regional Fed, effective immediately on that Thursday, and will officially leave the Fed on August 14. Starting from August 15, Bullard will serve as the inaugural dean of the Mitchell E. Daniels, Jr. School of Business at Purdue University.

The St. Louis Fed stated that after this Thursday, Bullard will serve as an advisor to the leadership team of the regional Fed, helping to ensure a smooth transition until August 14. He will no longer fulfill any monetary policy responsibilities in the Federal Open Market Committee (FOMC) of the Fed and will cease all public speeches.

At the same time, the St. Louis Fed announced that Kathleen O'Neill Paese, the first vice president of the regional Fed, will temporarily assume Bullard's role as president, effective on Thursday. This means that Paese will attend this month's FOMC monetary policy meeting instead of Bullard.

Bullard is an influential hawkish official of the Fed. He has worked at the St. Louis Fed for thirty-three years, serving as the president of the regional Fed for the past fifteen years, leading the Fed through the financial crisis, economic recession, massive quantitative easing, and the COVID-19 pandemic.

Since mid-2021, Bullard has been one of the most prominent hawkish officials at the Fed, being among the first to call for aggressive interest rate hikes. As one of the Fed policymakers with voting rights at FOMC meetings last year, Bullard advocated for rapid interest rate hikes during the peak period of rampant inflation in the United States.

Before the Fed's first 75 basis points rate hike in June last year, Bullard had proposed a 75 basis points rate hike as early as April last year. Until January this year, Bullard reiterated the need for front-loaded interest rate hikes, stating that policy rates should exceed 5% as soon as possible and that tightening should continue throughout the year.

After the Fed announced its tenth consecutive rate hike in early May, Bullard stated in late May that the inflation level was still too high and he expected two more rate hikes this year to curb high inflation. He also believed that the market overestimated the possibility of an economic recession in the United States. He did not specify the exact level to which rates should be raised, but he consistently advocated for early action.

In early June, Bullard reiterated that inflation was still too high. In his article, he assessed that monetary policy is currently in a sufficiently restrictive range for the economy, at the lower end of this range. He also pointed out that the PCE inflation indicator has fallen from its peak last year but remains high, and it cannot be guaranteed that inflation will continue to decline. He emphasized the need to remain vigilant about the prospect of inflation declining further. On the day Brad resigned, this Thursday, Mary Daly, the President of the Federal Reserve Bank of San Francisco, who, like Brad, does not have voting rights in the FOMC this year, stated that it is premature to declare victory in the fight against inflation.

Daly commented that the US CPI data released this Wednesday was "very positive," but she remains cautious because she is still determined to lower the inflation rate to the Fed's target of 2%.