Former St Louis Fed President Jim Bullard Talks Warsh's Nomination Process

Summary

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Podcast Summary: Bloomberg Talks

Episode: Former St Louis Fed President Jim Bullard Talks Warsh's Nomination Process
Date: March 11, 2026
Host: Bloomberg

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Episode Overview

In this episode, Bloomberg sits down with former St. Louis Federal Reserve President Jim Bullard to discuss the challenges surrounding Kevin Warsh’s nomination for Fed chair amid ongoing political contention. The conversation centers on the implications of a stalled Fed board, the economic impact of rising oil prices fueled by international conflict, and whether the US Federal Reserve is likely to respond with rate hikes. Bullard draws on historical context and current market signals to temper concerns about inflation and economic stability.

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Key Discussion Points & Insights

1. The Challenging Nomination Process for Kevin Warsh

• Host opens the discussion by framing the political reality: Senator Thom Tillis supports nominee Kevin Warsh but continues to block all Fed nominations pending the outcome of a criminal probe into current Chair Jay Powell.
• Jim Bullard (00:59): "He's got to get through the nomination process first... I don't think anything's going to happen. So nobody is going to be on the Fed board anytime soon."
  • Bullard suggests the nomination is stalled and unlikely to move forward without a deal between the administration and Congress.
  • He notes a lack of active negotiation to resolve the impasse.

2. Comparison with Past Fed Nominations and Economic Response

• Host (01:22): Recalls the previous delay in nominating Jay Powell for a second term, implying it hindered the Fed’s ability to respond to inflation after the pandemic.
• Bullard responds to concerns about the current situation:
  • "It's always, always critical, always, lots of, lots of interesting things going on, I would say, about this shock. It's not like the 70s." (01:57)
  • He notes the differences—especially that the US is now a leading oil producer, unlike during the 1970s oil shocks.

3. Economic Impact of Current Oil Shocks

• Bullard argues the threat of recession from oil price increases is "probably smaller than it would have otherwise been" thanks to the US's oil production. (01:57)
• The Fed primarily focuses on core inflation—which excludes food and energy—so direct moves in oil prices might not prompt immediate action.
  • "The Fed looks through oil price Shocks anyway... there's only a small effect on core inflation from this." (01:57)
• The real risk is if "inflation expectations would start to rise because markets would start to think that the Fed was going to accommodate this shock, which is what happened in the 70s." Bullard suggests this scenario is less likely today.

4. US Economic Resilience

• Interviewer (03:08): Asks Bullard why he remains confident about US economic momentum.
• Bullard (03:21): Points out:
  • Higher oil prices in history, e.g., in 2008, and that the US economy weathered those.
  • Being a leading oil producer offers the US "supply side offsetting some of that."
  • The market focus is rightly on "how long would this conflict continue to go on? ... US could withdraw at any point."
• Bullard sees less risk of sustained damage than many fear.

5. Global Central Bank Responses to Oil Shock

• Interviewer (04:13): Notes that the ECB and Bank of England may respond with rate hikes due to high oil prices, asking if the Fed will face similar pressures.
• Bullard (04:29):
  • Unlikely that the Fed will hike in response to oil alone, "more likely scenarios that they just stay on hold longer...to send a signal that they want to keep inflation under control."
  • Again, emphasizes that "inflation expectations... matter more than oil price movements directly."

6. Practical Inflation Effects on Consumers and Fed Policy

• Interviewer (04:55): Draws attention to rising costs for transportation, airline surcharges, and general consumer gas prices.
• Bullard (05:20):
  • Acknowledges pain for consumers: "people are really paying these things. It really does matter. Yes."
  • Reminds that "the committee looks at core inflation... they're not going to react to movements in food and energy prices."
  • The Fed relies more on measures like core PCE or the Dallas Fed’s trimmed mean inflation indexes to guide policy.
  • "When you're trying to make policy for the medium term, you've got to look through some of it."

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Notable Quotes & Memorable Moments

• On the nomination process:

  • “I don’t think anything’s going to happen. So nobody is going to be on the Fed board anytime soon.” – Jim Bullard, 00:59

• On current versus 1970s oil shocks:

  • “This is not like the 70s… the US is a leading oil producer today and weren’t at that time. So I think the recession threat from this shock is probably smaller...” – Jim Bullard, 01:57

• On consumer anxiety over gas prices:

  • “Gas prices are certainly something we all pay every day. So that has acted like a tax in the past. But you’ve also got the supply side… which is offsetting some of that.” – Jim Bullard, 03:21

• On Fed’s likely response to oil-driven inflation:

  • “I think the more likely scenario is that they just stay on hold longer… inflation expectations probably… matter more than the oil price movements directly.” – Jim Bullard, 04:29

• On real-world versus core measures:

  • “Sure, yeah, people are really paying these things. It really does matter. Yes. But when you’re trying to make policy for the medium term, you’ve got to look through some of it.” – Jim Bullard, 05:20

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Timestamps for Key Segments

• 00:36 — Setting the stage: Warsh’s nomination and political hurdles
• 00:59 — Bullard on the stalled nomination process
• 01:22 — Host links delays in Fed appointments to earlier monetary policy missteps
• 01:57 — Bullard compares current shock to the 1970s and explains recession risk
• 03:08 — Interviewer queries Bullard’s confidence in US economic resilience
• 03:21 — Bullard on oil prices, US as a producer, and market focus
• 04:13 — International central bank comparisons; Fed’s likely strategy
• 04:55 — Impact of oil prices on consumer costs, and Fed’s focus on core inflation
• 05:20 — Bullard on policy outlook and real-world inflation effects

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Overall Tone

Jim Bullard remains measured and practical, advocating for a nuanced understanding of inflation and appropriately cautious policy intervention. The dialogue is informed and non-alarmist, with Bullard frequently distinguishing between the real pain felt by consumers and the broader, more structural considerations that drive Federal Reserve policymaking.

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Transcript

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[Host]

let's turn to the Federal Reserve. The Republican Senator Thom Tillis praising Fed chair nominee Kevin Walsh following their meeting yesterday, but not wavering on his promise to block any Fed nominations until the criminal probe into the current chair, Jay Powell, ends. The former St. Louis Fed president, Jim Pull out, joins us now for more. Jim, welcome to the program. Set the stage. How difficult a moment is this for an incoming Fed chair?

[Jim Bullard]

Yeah, so he's got to get through the nomination process first. And as I, as I understand it, anyway, I don't think anything's going to happen. So nobody is going to be on the Fed board anytime soon. The way this is going, the administration will have to come to some kind of deal. They don't seem to be talking about that. So I think it's stalled for now.

[Host]

It's the second time we've had to deal with this, Jim, before it was largely in the president's hands and for whatever reason, reason, Biden stalled. He stalled. He stalled and waited a long, long time to reselect, renominate Chair Powell for a second term. And some people, even people who were on the committee at the time, said that's what stopped this Federal Reserve from hiking quickly enough to respond to the energy crisis and the inflation pandemic shock coming out of the pandemic. Now, Jim, I just wonder this time around how critical this moment actually is with a fragile labor market and pressure once again on inflation coming from energy.

[Jim Bullard]

Well, it's always, always critical, always, lots of, lots of interesting things going on, I would say, about this shock. It's not like the 70s. I mean, this is of course, this is going to bring up, you know, hearkening back to the 70s. But the US is a leading oil producer today and weren't at that time. So I think the recession threat from this shock is probably smaller than it would have otherwise been because you've got the supply side kind of offsetting demand destruction that could occur. So, so I think, and then on the inflation side, well, you know, the Fed looks through oil price Shocks anyway, they look at core inflation. So there's only a small effect on core inflation from this. So it's really whether it's inflation expectations would start to rise because markets would start to think that the Fed was going to accommodate this shock, which is what happened in the 70s. I don't think the committee's in much of a mood to do that. So I think it's a different situation. Even though this is a really big shock, it's a different situation than what we saw earlier in the postwar era.

[Interviewer]

Jim, what gives you confidence that there's enough momentum in the underlying economy to make this not an issue of demand destruction, not an issue of the consumer increasingly cramped?

[Jim Bullard]

Yeah, I just think, you know, this, the shock would hit the US economy and that would be, you know, gas prices are certainly something we all pay every day. So that has acted like a tax in the past. But you've also got a supply side, you know, being the world's leading oil producer, which is offsetting some of that. I would also say that we've, you know, we've seen actually higher oil prices in the past 145, if I, if I recall correctly in 2008. And in real terms that would be over $200 a barrel. So that's a very different scenario. Markets are right to focus on. Well, how long would this conflict continue to go on? You know, us could withdraw at any point saying it's declare victory and withdraw. So we'll see, we'll see what happens here.

[Interviewer]

We see, Jim, expectations over at the ECB as well as the bank of England for a potential rate hike increasingly price and in response to higher oil prices. Do you think that people will start thinking about the same here in the us?

[Jim Bullard]

I don't know if they go that far. I think more would have to happen before they go that far. I think the more likely scenarios that they just stay on hold longer than they otherwise would have in order to send a signal that they want to keep inflation under control. But again, it's the inflation expectations probably that matter more than than the oil price movements directly.

[Interviewer]

Well, we already see airlines across Europe and Asia increasing fares. They're raising the fuel surcharges given what's going on in the war also in America we are a farm to table society. All of our food comes because of petrol and gasoline on trucks. Isn't that going to be a problem for this Federal Reserve? Not just the fact that gasoline prices this morning are closer to $4 a gallon than three?

[Jim Bullard]

Yeah, I mean it's going to be a problem for headline inflation. But you know, the committee looks at core inflation, so the whole point of that is to say that they're not going to react to movements in food and energy prices. That that can be pretty transitory and have historically been pretty transitory so that what they want is the underlying in inflation. And you could look at core PCE inflation, which the committee likes, or Dallas Fed trend me inflation, which throws out some of the high and low price changes that occur in that price change distribution. So sure, yeah, people are really paying these things. It really does matter. Yes, but when you're trying to make policy for the medium term, you've got to look through some of it.

[Host]

Hi Jim, it's good to see you. Always great to catch up. Jim Bullard there, the former St. Louis Fed president. The takeaway there not much to see here seems to be the view of one Fed official, one former Fed official

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