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Federal Reserve Bank of St. Louis President James Bullard was the sole dissenter in the Fed's decision this week not to cut U.S. interest rates.

It's no fun being alone. 

That may be why James Bullard, president of the Federal Reserve Bank of St. Louis, is now speaking up about his decision this week to vote against the majority on Fed Chairman Jerome Powell's monetary-policy committee.

The other nine members of the panel voted Wednesday to hold the official U.S. interest rate at its current level in a range of 2.25% to 2.5%, while signaling that a reduction might be needed soon amid signs of growing risks to the economy.

But Bullard, a former economics professor who has served in his role for more than a decade, cast a dissenting vote -- to go ahead and cut rates now, by a quarter percentage point. It was the first time since Powell became Fed chair in early 2018 that he's failed to obtain a unanimous vote.   

In a web post Friday, Bullard said he was moved by expectations that the economy will slow for the rest of this year, along with stubbornly low inflation that has persistently fallen short of the Fed's 2% target.  

"I believe that lowering the target range for the federal funds rate at this time would provide insurance against further declines in expected inflation and a slowing economy subject to elevated downside risks," Bullard wrote on the St. Louis Fed's website. "A rate cut would help promote a more rapid return of inflation and inflation expectations to target."

He said he hasn't lost confidence in his colleagues, though. 

"Although I disagreed with the committee's decision to leave its target range for the federal funds rate unchanged, I remain confident that the committee will continue to monitor economic developments and respond accordingly as economic circumstances dictate," Bullard wrote. 

Harmony restored?

It turns out that many economists and investors actually think the committee will soon come around to Bullard's point of view.

Futures markets on federal funds imply that traders see 100% odds of a rate cut of at least a quarter percentage point at the Fed's next scheduled meeting, on July 31.

Last year, President Donald Trump criticized Powell, his own appointee, for raising interest rates too far and too quickly. And this year, Trump has publicly stated his desire for lower rates as a way of extending the current decade-old economic expansion, already one of the longest in U.S. history. 

Such a move would likely boost Trump's election prospects, though some Fed observers have blasted the president for seeming to interfere in monetary policy, which is supposed to remain independent of political calculations. 

On Friday, the Federal Reserve's vice chair, Richard Clarida, who voted with the majority to keep rates on hold, told Bloomberg Television that "the case for providing accommodation has increased." 

And it emerged Friday that Bullard wasn't the only person in the Fed's closed-door meeting this week pushing for rate cuts.  

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, wrote in a published essay that he advocated behind the scenes for a half-percentage point rate cut. Kashkari isn't currently a voting member of the Fed's monetary-policy committee but attends the meetings along with other top regional officials of the central bank.

He said Fed officials should publicly commit to keeping interest rates low until investors start to believe inflation will average 2% over the long term. Since the goal was first adopted in 2012, he said, the Fed has mostly treated it as a "ceiling" rather than an average.

"This strategy will also support further job growth, stronger wage growth and continued economic expansion," he wrote. 

The risk of leaving interest rates too low, of course, is that inflation quickly accelerates out of control or that investors take excessive risks in search of a little extra yield.   

For now, though, Bullard's dissent this week increasingly looks like a leading indicator -- of what the rest of Powell's committee might do in July.