Federal Reserve Chair candidate Bullard suggests an aggressive rate cut path: a 100 basis point cut this year, with the first action in September

James Bullard, a strong contender for the position of Federal Reserve Chair, has publicly called for aggressive interest rate cuts, adding new variables to market expectations regarding the future policy path of the U.S. central bank.

According to media reports, Bullard suggested on Thursday that the Federal Reserve should cut rates by a full percentage point, or 100 basis points, within this year, and clearly indicated that the first action should begin at the September meeting. Bullard is currently the Dean of the Purdue University College of Business.

Meanwhile, Atlanta Fed President Raphael Bostic reiterated a more moderate view. He stated that he still expects one rate cut this year, consistent with his prediction in June. Bostic's cautious stance highlights the policy divergence within the Federal Reserve as it faces signs of a weakening labor market alongside inflationary pressures.

These starkly different views come as investors widely anticipate that the Federal Reserve will initiate a rate-cutting cycle at the September meeting. Futures contract prices indicate that the market sees a high likelihood of a 25 basis point cut at that time. Global financial markets are in a tense wait-and-see mode, with investors holding their breath for the upcoming Jackson Hole Global Central Bank Annual Meeting, hoping to find key clues regarding the interest rate path.

Bullard's Aggressive Rate Cut Blueprint

Former St. Louis Fed President Bullard believes that the Federal Reserve's policy rate is currently "a bit too high" and should take swift action. In an interview with Fox Business, he stated:

“I think by 2026, we could lower by about 100 basis points — this could start with a rate cut in September and possibly follow up later this year.”

Bullard revealed that he has communicated with Treasury Secretary Janet Yellen regarding his candidacy for the Federal Reserve Chair and plans to arrange a meeting after Labor Day on September 1. Whether there will be further rate cuts in 2026 will depend on future economic data. He also emphasized the necessity of protecting the dollar's status as the reserve currency.

Current Officials' Views Are More Cautious

In contrast to Bullard's clear stance, current Atlanta Fed President Raphael Bostic's attitude is much more cautious. Bostic stated on Thursday at an event organized by the Atlanta Chamber of Commerce that he still stands by his prediction of one rate cut this year, but also added that any prediction carries "a large confidence interval," and he "does not cling to any viewpoint."

Bostic pointed out that the latest employment report shows that the trajectory of the labor market "may be concerning." The report indicated a significant slowdown in job growth over the three months ending in July. However, last week's Producer Price Index (PPI) showed that wholesale inflation in July recorded the largest increase in three years, indicating that businesses are passing tariff costs onto consumers. Bostic prefers that once the Federal Reserve begins to adjust rates, it should continue in one direction rather than oscillating back and forth.

The divergence in views among Federal Reserve officials comes at a critical moment for policy-making. Bostic described the current level of interest rates as "marginally" restrictive and expects officials to shift to a more neutral stance next year