Exclusive: Former Fed Bullard Signals Conditions for Chair Role After Meeting Treasury Chief

James Bullard Considers Fed Chair Role Under Certain Conditions

James Bullard, the former president of the Federal Reserve Bank of St. Louis, recently shared his thoughts on the possibility of becoming the next Federal Reserve Chair. In an interview, he mentioned that he had a conversation with Treasury Secretary Scott Bessent about the position and expressed interest in the role under the right circumstances.

Bullard, who currently serves as Dean of the Mitch Daniels School of Business at Purdue University, led the St. Louis Fed from 2008 to 2023. His discussion with the Trump administration comes at a critical time, as officials are actively seeking a replacement for Jerome Powell, whose term as Fed Chair ends next May.

“I’d be willing to take the job if we’re set up for success,” Bullard said. He outlined what success would mean: defending the dollar’s reserve currency status, maintaining low and stable inflation, and protecting the independence of the institution.

The Trump administration has been conducting interviews with potential candidates for the top Fed position. Powell, who is in the final months of his second term, could remain as a governor until 2028. However, the administration has consistently criticized the Fed under Powell and has pushed for aggressive interest rate cuts.

Despite these pressures, the Fed has maintained its current federal funds rate target between 4.25% and 4.5%. This decision is based on ongoing inflation concerns, which have remained above the 2% target. The recent trade tariffs introduced by Trump are expected to temporarily increase prices, adding to inflationary pressures.

The Fed is anticipated to cut its interest rate target by a quarter of a percentage point this Wednesday. While inflation remains a concern, the central bank's mandate also includes supporting a strong job market. Recent tepid job gains have prompted some policymakers to consider rate reductions.

Expectations for Rate Cuts

In the interview, Bullard stated that he expects the Federal Open Market Committee to cut rates by 25 basis points and signal further easing. “I think markets are right to price in 75 basis points by the end of this year,” he said.

He also noted that tariffs are likely to have a temporary impact on inflation. Given that imports make up a small portion of the U.S. economy, he believes the effects of tariffs will not persistently drive up prices. Additionally, inflation is expected to come in at or below the levels forecasted during the June policy meeting.

This outlook allows the Fed to focus more on the job market, where signs of weakness are considered manageable. Changes in immigration policy may have reduced the number of jobs needed each month to maintain a steady unemployment rate, leading to smaller job gains in the future.

Focus on Monetary Policy Flexibility

During his tenure at the Fed, Bullard advocated for flexible monetary policy and was willing to adjust strategies based on economic needs. His former research director at the St. Louis Fed, Christopher Waller, is now a Fed governor and has also been mentioned as a potential successor to Powell.

The pressure from the Trump administration on the Fed, including threats to fire Powell, has raised concerns about the central bank’s independence. These tensions reached a peak with the attempted firing of Fed Governor Lisa Cook over allegations of mortgage fraud, a case currently under legal review.

“Fed independence is very important,” Bullard emphasized. He stressed the importance of keeping politics out of the central bank to ensure positive economic and financial outcomes.

Regarding the Cook situation, Bullard said, “Any member of the FOMC should get due process so you can’t just allow charges to be made and someone has to quit.” He highlighted the need for fairness and proper procedures in handling such allegations.