MNI POLICY: Fed Bullard Calls for 25bp July Cut, 1 More By Dec

By Jean Yung

     WASHINGTON (MNI) - Federal Reserve Bank of St. Louis President Jim Bullard

on Wednesday called for a quarter-point interest rate cut at the July 31 FOMC

meeting and added that one more rate cut may be warranted by the end of the

year. 

     "I would like to make modest moves to re-center inflation and inflation

expectations at our 2% target," he told reporters. Lowering rates would help the

Fed "build credibility" for its commitment to its 2% inflation target and "take

out some insurance" against the risk that the economy slows more than officials

currently expect, he said. 

     A second rate cut this year would depend on how the economy and inflation

and inflation expectations fare and whether "downside risks to the real economy

seem to be more severe or not than we're currently expecting," he said. 

     He added that the current situation of heightened trade tensions and

below-target inflation does not call for a half-point rate cut. However, he does

not expect trade uncertainty to be "resolved anytime soon," as it is the

hallmark of a global shift in sentiment away from free trade. 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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