The Fed Is Split ‘Down the Middle’ on Rate Hikes | Former Fed President Jim Bullard

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Former St. Louis Fed President Jim Bullard said the FOMC is split “down the middle” on rates, with a September hike shifting from a long shot to the base case after Kevin Warsh’s Jackson Hole speech. He framed even a hold as potentially hawkish, warned the Fed’s dot plot creates a communication trap, and said the central bank is under pressure amid persistent inflation, a fiscal backdrop of roughly 6% deficits, and debt that could head toward 120%-150% of GDP. For gold, Bullard’s key point was that foreign central banks have been diversifying away from Treasuries and that physical gold has looked more attractive than Bitcoin over the past year. He argued that gold’s rally itself signals eroding faith in the Fed, something policymakers are watching closely. He also highlighted the old U.S. gold book value of $42.22/oz against the 261 million ounces on the government balance sheet, suggesting mark-to-market accounting is an obvious question. Near term, the rate-path debate is mixed for metals: a firmer hiking bias would normally cap bullion, but Bullard’s broader message on fiscal deterioration, reserve diversification, and declining confidence in fiat assets is structurally supportive for gold. The key catalyst is whether September pricing continues to harden after Jackson Hole rhetoric, while the other watchpoint is any further discussion of U.S. gold reserve revaluation or central-bank reserve composition.