Further comments by Bullard, as he speaks to Bloomberg TV
- Markets are putting highs odds on a September rate hike
- Thinks that they are close or very close to neutral rates now
- Would rather not be calling rates "accommodative" now
- Inflation is sluggish but Fed could move fast if needed
- Markets doubt that Fed will hit inflation goal over the next 5-10 years
- No reason to "challenge" the yield curve at this time
- Fed doesn't need to be preemptive on the yield curve
- Fed has telegraphed its plans clearly to the rest of the world
As mentioned earlier, I'm not putting high hopes on any substantial remarks by Powell later on but we'll see if he has the ability to surprise. But him not delivering anything hawkish could set up for some disappointment to those hoping for something (cue dollar selling).
Anyway, Bullard's comments haven't offered anything new so far and from the looks of it he's saying that the Fed will not react until the yield curve actually inverts. And even then, it's still to be seen if they're going to brush it off to "extraordinary factors" in the market.
I believe his last comment sums everything up. The Fed has allowed the market to believe a rate hike is coming in September and one is almost certainly to come in December. And the rate hike odds reflect that well. September is virtually a done deal while a December hike has about a 70% probability right now, and I believe the Fed is rather comfortable with that.
