FILE PHOTO: St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015. REUTERS/Lucas Jackson/File Photo
FILE PHOTO: President and CEO of the Federal Reserve Bank of St. Louis James Bullard poses during an interview at the Federal Reserve Bank of St. Louis June 8, 2011. REUTERS/Peter Newcomb/File Photo
FILE PHOTO: St. Louis Federal Reserve Bank President James Bullard speaks at a public lecture in Singapore October 8, 2018. REUTERS/Edgar Su/File Photo

By Michael S. Derby

(Reuters) - James Bullard, the former president of the Federal Reserve Bank of St. Louis, said Monday he’d spoken last week with Treasury Secretary Scott Bessent about becoming central bank chair, and that he’s very interested in the job under the right set of conditions.

“I talked to the Treasury secretary last Wednesday and his team” about the top Fed position as well as other issues, Bullard said in an interview with Reuters. Bullard, who is now Dean of the Mitch Daniels School of Business at Purdue University, led the St. Louis Fed from 2008 to 2023.

The Trump administration is currently interviewing candidates to replace Fed Chair Jerome Powell, whose term ends next May.

“I'd be willing to take the job … if we're set up for success,” Bullard said. “Success means that … we want to defend the reserve currency status of the dollar, want to keep inflation low and stable, and we want to protect the independence of the institution,” he said, adding “if we're going to go in that direction, then I think, you know, I'd be very interested in the job.”

Bullard’s conversation with the Trump administration comes as officials there have said they’ve been casting a wide net in searching for a replacement for Powell, who is in the closing months of his second term as leader of the central bank, although he has the ability to stay on as a governor until 2028.

President Donald Trump and Bessent have been steady critics of the Fed under Powell and have been pressuring the central bank to cut interest rates aggressively.

The Fed has thus far kept its current 4.25% to 4.5% federal funds rate target range due to the fact that inflation pressures have stood well above the 2% target and are expected to rise further as Trump’s trade tariffs push up prices, at least for a time.

The Fed is broadly expected to cut its interest rate target by a quarter of a percentage point this Wednesday.

While officials are still concerned about inflation, the other side of their congressional mandate, supporting a strong job market, has come under pressure. Tepid job gains over recent months have tilted central bankers toward a reduction in borrowing costs that’s likely to see their interest rate target lowered by a quarter percentage point, with more easings coming after that.

TIME TO EASE

Bullard said in the interview he's expecting the rate setting Federal Open Market Committee to cut by 25 basis points and signal more easings ahead. "I think markets are right to price in 75 basis points by the end of this year," the former central banker said.

In the interview, Bullard said he agreed with those who argue tariffs are likely to be a transitory influence on inflation and are unlikely to persistently push up price pressures, given that imports are, broadly speaking, a modest input to the U.S. economy. He said that buttressing the case for rate cuts is the fact that inflation is now likely to come in at or below where officials forecasted back at their June policy meeting.

That allows officials to turn their attention to the jobs market, where signs of weakness are "manageable," Bullard said. He explained that changes in immigration policy have likely lowered the number of jobs the economy needs to create monthly to keep the unemployment rate steady, which suggests going forward monthly job gains will be smaller, with the risk of turning negative.

Bullard's tenure at the central bank saw the former policymaker pressing for nimble monetary policy actions, amid a willingness to shift gears if he thought that was what the economy needed. Bullard's former research director at the St. Louis Fed, Christopher Waller, is now a Fed governor, and his name has also been in the running for succeeding Powell.

The pressure placed on the Fed by Trump, which has included repeated threats to fire Powell, has in the view of many observers threatened the legal independence of the central bank. Those pressures have come to head with the attempted firing of Fed Governor Lisa Cook over allegations of mortgage fraud, a case now moving through the court system.

"Fed independence is very important," and keeping politics out of the central bank is important to good economic and financial outcomes, Bullard said in the interview.

Bullard said on the Cook situation, "I think any member of the FOMC should get due process so you can, I don't think you should just allow charges to be made and somebody has to quit."

(Reporting by Michael S. Derby; Editing by Nick Zieminski)