Strong Case for 50 Basis Point Fed Cut, Says Former NY Fed Chief Dudley
Dudley Says Economy Faces Headwinds
Former New York Fed President William Dudley said on Monday that he sees a "strong case" for the Federal Reserve to cut interest rates by 50 basis points at its next meeting.
Dudley, who is now a senior adviser to Bloomberg LP, said in an interview with Bloomberg TV that the economy is facing a number of headwinds, including the ongoing trade war with China, weak business investment, and a slowdown in global growth.
Fed Cut Would Provide 'Insurance'
Dudley said that a 50-basis-point cut would provide "insurance" against these risks and help to keep the economy on track.
"I think the Fed should do what it needs to do to make sure that the economy stays on track," Dudley said.
"I think that means cutting rates by 50 basis points at the next meeting."
Other Economists Agree
Dudley's view is shared by a number of other economists.
Goldman Sachs, for example, said in a recent note that it now sees a "higher probability" of a 50-basis-point cut at the Fed's next meeting.
And Bank of America Merrill Lynch said in a note that it now sees a "50% chance" of a 50-basis-point cut.
Fed to Meet in July
The Fed is scheduled to meet next on July 30-31.
The market is currently pricing in a 25-basis-point cut at that meeting, but Dudley's comments suggest that a 50-basis-point cut is now a possibility.
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