Australian Exchange Foreign Exchange, sudden! Fed "big hawk" Brad leaves and will teach at business school

On Thursday, Mr. Bullard, a prominent "hawk" member of the Federal Reserve, said he would step down as chairperson of the St Louis Fed after 15 years at the bank before becoming dean of Purdue University's business school.

Since mid-2021, Mr. Bullard has been pushing the Fed to take more aggressive steps to rein in the hottest inflation in decades. He believes the Fed is wrong to view high inflation as "temporary". Mr. Bullard was one of the first to call for a big rate rise.

Mr. Bullard does not have a vote on the FOMC this year, but because his views sometimes foreshadow policy changes, his comments have been viewed as a bellwether by markets. Mr. Bullard's 2010 paper, "Seven Dangerous Faces," called on central banks to avoid deflation by buying Treasuries. The Fed followed with a second round of bond purchases.

The St. Louis Fed said that while Bullard will remain at the bank in an advisory capacity for the next month, he has stepped down from his monetary policy role and other related roles at the FOMC and has stopped all public speaking.

Kathleen O'Neill Paese, the bank's "second-in-command", will become interim chairperson, effective immediately, and its board will begin the search for Mr. Bullard's successor in a process that will be "substantial, transparent, fair and inclusive".

Stephen Stanley, chief US economist at Santander US capital markets, said: "Brad has been one of the most thoughtful members of the FOMC for many years. His views are not easily categorised. Sometimes he was a hawk, sometimes he was a dove, but his views were always thought-provoking and he will be missed by the FOMC."

Multiple job openings

Mr. Bullard's departure will leave a third vacancy on the Fed's 19-member rate-setting committee. Economist Adriana Kugler is awaiting confirmation to the board, while the Kansas City Fed is still looking for a permanent leader to replace George, who retired in January.

Bullard, the longest-serving incumbent at the regional Fed, has not hinted that he is considering leaving the bank early. He has not faced the issue of mandatory retirement at 65 for several years.

David Andolfatto, an economist who left the bank last year to head the economics department at the University of Miami, said the move was "shocking". "He [Brad] doesn't disagree very often, but when he does, he's always proven right," Andolfatto said.

Bullard has voted against four times during his tenure on the FOMC: once in March 2022, when he favored a larger rate hike, and three times before the COVID-19 pandemic, when he favored a more accommodative policy.