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Fed's 'insurance' rate cuts can be reversed if outlook improves - Bullard

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By Marc Jones

LONDON (Reuters) – The two “insurance” U.S. interest rate cuts this year could be reversed if the outlook for the world’s biggest economy improves, one of the Federal Reserve’s top policymakers said on Tuesday.

“We are lowering the policy rate today, we are taking on board downside risk but we can take back that insurance in 2020 or 2021 if it turns out we were overally worried about the downside risks.”

Bullard added that he was hopeful that the Fed’s swift moves to cut rates in recent months had helped stave off a lengthy inversion of the 2-10-year bond yield curve, that has preluded U.S. recessions in the past.

(Reporting by Dhara Ranasinghe; editing by Marc Jones)

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