Published: Wed, October 16, 2019
Markets | By Otis Pena

Fed's James Bullard Cites Risk of Slowing Economy

Fed's James Bullard Cites Risk of Slowing Economy

According to the Federal Reserve Board, the final rules simplify the proposals by applying liquidity standards to a foreign bank's USA intermediate holding company (IHC) based on the risk profile of the IHC, instead on the integrated United States operations of the foreign bank.

"I'm not a fan of this policy", Bullard told the press on the sidelines of an event in London.

Minneapolis Fed President Neel Kashkari, one of the Fed's other biggest supporters of lower rates although not a voter right now, said in a Wall Street Journal interview last week that "if the data continues to come in the way it has, I'm going to be supportive of another rate cut. The bottom line is that USA monetary policy is considerably more accommodative today than it was as of late previous year".

But negative interest rates, adopted in large parts of Europe and Japan since the global financial crisis, were not on his list.

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"Negative interest rates have had mixed results where they've been tried", he said, adding that it was not clear either how multi-trillion dollar USA money markets would adapt to such a policy. Although, given that the FED has turned quite dovish recently and cut rates twice in the last two meetings, Bullard didn't really sound that dovish.

But he's not necessarily pushing for another rate cut yet.

He also sketched plans for the Fed to start new "repo" funding operations in the wake of recent money market troubles caused by sudden surges in demand for cash.

The Fed has been lowering rates to help mitigate risks to the economy posed by slowing global growth and trade uncertainty.

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