Fed’s Bullard steps down to head Purdue business school

Federal Reserve Bank of St. Louis President James Bullard, an influential voice who called for aggressive interest-rate hikes to fight the recent inflation surge, resigned after 15 years in the position to become dean of a university business school.

Bullard, 62, stepped down from his post as head of the bank effective Thursday and will fully depart Aug. 14 to become the inaugural dean of the Mitchell E. Daniels, Jr. School of Business at Purdue University, the St. Louis Fed said in a statement Thursday.

Bullard has been pushing the Fed since mid-2021 to take more-aggressive steps to curb the fastest inflation in decades. He argued that the Fed was wrong to consider price pressures “transitory” and was among the first to call for jumbo-sized hikes, including three-quarter point moves.

Bullard, who doesn’t vote on rates this year, has been seen as a bellwether because his views have sometimes foreshadowed policy changes. He published a paper in 2010 titled “Seven Faces of the Peril,” which called on the central bank to avert deflation by purchasing Treasury notes. That was followed by a second round of bond buying.

While Bullard remains at the bank in an advisory capacity over the next month, he has recused himself from his monetary policy role on the Federal Open Market Committee and other related duties and has ceased all public speaking, the St. Louis Fed said.

“Bullard was an intellectual force on the FOMC, at once dovish but recently on the hawkish end with strong theoretical appeals for getting ahead of the inflation issue,” said Derek Tang, economist with LH Meyer/Monetary Policy Analytics. “His absence will lessen the discourse power of the hawks and put more weight on similarly vocal but dovish peers” like Chicago Fed President Austan Goolsbee.

The St. Louis Fed’s No. 2 official, Kathleen O’Neill Paese, becomes interim president effective immediately. The bank’s board will begin a search that’s “robust, transparent, fair and inclusive,” according to the statement.

“Bullard was one of the most thoughtful members of the FOMC for many years,” Santander U.S. Capital Markets Chief U.S. Economist Stephen Stanley said. “His views were not easily pigeon-holed into neat categorization. At times, he was hawkish, and at other times, he was dovish, but his views always thought-provoking. He will be missed by the FOMC.”

His departure will leave a third vacancy on the Fed’s 19-member rate-setting committee. Economist Adriana Kugler is awaiting confirmation as governor on the Fed board, and the Kansas City Fed is still searching for a permanent leader to succeed Esther George, who retired as the bank’s president in January.

Bullard, who was the longest tenured among the current regional Fed presidents, had given no hint that he was considering an early departure from the bank. He didn’t face mandatory retirement at 65 for several years.

David Andolfatto, an economist who left the bank last year to head the University of Miami’s economics department and has continued to visit the bank, said the move came as a “shock.”

Andolfatto said Bullard’s academic background made him appreciate the role of theory in interpreting data and developing policy recommendations.

“He did not dissent often, but when he did, he was always proved right,” he said. “He was always ahead of the curve.”

Bullard cast four dissenting votes during his tenure on the FOMC: once in March of 2022, favoring a larger interest-rate increase, and three times before the pandemic in favor of easier policy.

A native of Forest Lake, Minnesota, Bullard went to study economics at St. Cloud State University and earned his doctorate at Indiana University.