(April 9): Former Federal Reserve (Fed) Bank of St Louis president James Bullard said he expects three interest rate cuts this year, as inflation moves towards the central bank’s target while the economy remains resilient.

“At this point, you should probably take the committee and chair at face value — their best guess right now is still three cuts this year,” Bullard said on Tuesday in an interview with Bloomberg TV. “That’s the base case.”

“You’re looking at a very successful policy with a pretty strong economy, so a lot of things going right for the Fed right now,” he said on the sidelines of HSBC’s Global Investment Summit in Hong Kong.

Bullard, now the dean of the Purdue University’s business school after leaving the regional Fed bank last year, also said economic data already justifies a rate cut.

Bullard was the longest-serving regional Fed president and known for his contrarian takes. When at the St Louis Fed, he most recently advocated for more aggressive policy action to rein in what was at the time accelerating inflation.

Fed officials agreed in their March meeting that it would be appropriate to begin reducing rates this year, with a median estimate of three cuts. At the same time, Fed chair Jerome Powell said that the central bank doesn’t need to rush to ease policy, with more evidence needed that inflation is easing sustainably.

Meanwhile, investors have boosted bets that two rate cuts are more likely than three this year, following the blow-out March payrolls report.

Treasury yields reached their highest levels of the year on Monday, as traders pushed back expectations for how the Fed will act. On Monday, swap contracts priced in around 60 basis points of easing this year beginning in September, a view that assigns less than 50% odds to a third cut.

The solid labour market adds to other signs of inflationary pressures holding firm. Consumer prices rose more than expected in February, and economists are penciling in another increase in data due on Wednesday in the US.

Some officials even see the potential for no cuts at all this year. Minneapolis Fed president Neel Kashkari said they may not be needed if inflation continues to trend sideways.