Revolution in monetary policy?

David Marsh, Managing Director of The Official Monetary and Financial Institutions Forum (OMFIF), on what he dubbed the "monetary about-face" by James Bullard, the hawk-turned-dove St. Louis Federal Reserve Bank president:

 James Bullard, St. Louis Fed President

James Bullard, St. Louis Fed President

If other members of the rate-setting Federal Open Market Committee adhere to the St. Louis Fed’s ‘new narrative’, this could mark a revolution in monetary policy.

Janet Yellen, the Fed chair, does not appear to have been consulted about Bullard’s announcement. Although some might believe his radical rethink represents a challenge to her authority, she can take some comfort from the conversion of a one-time hawk to an adherent of her own somewhat dovish stance.

Marsh said Bullard's narrative could seal the "dot plot" chart's fate:

If momentum for the ‘new narrative’ gains ground, Bullard could trigger the dot plot’s demise – a feat in which he would no doubt take quiet pride.

The so-called "dot plot", representing U.S. policymakers' assessment of the future rate path, has been quite often criticized for being misleading, in particular for lacking clarity on uncertainty surrounding the rate projections.

Bullard's presentation of his "new narrative" is available on St. Louis Fed's website.