{"id":15519,"date":"2024-07-24T19:11:26","date_gmt":"2024-07-24T16:11:26","guid":{"rendered":"https:\/\/forklog.com\/en\/former-fed-official-urges-rate-cut-in-july\/"},"modified":"2024-07-24T19:11:26","modified_gmt":"2024-07-24T16:11:26","slug":"former-fed-official-urges-rate-cut-in-july","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/former-fed-official-urges-rate-cut-in-july\/","title":{"rendered":"Former Fed Official Urges Rate Cut in July"},"content":{"rendered":"

The Fed<\/span> should lower rates, preferably at the meeting on July 31. This was reported by former New York Fed President William Dudley to Bloomberg<\/a>.<\/p>\n

The ex-official acknowledged that he previously believed in maintaining monetary policy to combat inflation, but due to new circumstances, he has abandoned his former stance.<\/p>\n

The expert noted the impact of the Fed’s efforts to cool the economy.<\/p>\n

Amid sustained high consumption by affluent households, less wealthy segments of the population have felt the impact of high credit rates. A decline in activity has been observed in the housing sector. The former official also noted signs of weakening investments.<\/p>\n

Dudley mentioned a special indicator, the Sahm Rule<\/a>, which signaled an impending recession. This metric accurately predicted economic downturns in the 1970s when the labor market was overheating.<\/p>\n

Inflationary pressure, which concerned the Fed in previous months, is no longer as significant, judging by the annual PCE<\/span> \u2014 2.6% against the target of 2%, he noted. The same applies to wage dynamics, with growth rates weakening from a peak of 6% in March 2022 to 3.9% by the end of June 2024.<\/p>\n

Dudley cited three reasons why the Fed is reluctant to cut rates on July 31:<\/p>\n

    \n
  1. The Fed fears making a mistake \u2014 due to the low base of last year, slowing inflation in the coming months will be challenging.<\/li>\n
  2. Fed Chair Jerome Powell may be seeking broad consensus on central bank actions \u2014 not all “hawks” are ready for a rate cut in September.<\/li>\n
  3. The Fed appears unconcerned about the risk of unemployment exceeding the threshold set by the Sahm Rule.<\/li>\n<\/ol>\n

    According to this metric, after a 0.5% rise in unemployment, a sharp 2 percentage point increase in the indicator followed, Dudley emphasized.<\/p>\n

    \n

    “It may already be too late to prevent a recession by lowering rates. But delaying now unjustifiably increases the risk,”<\/em> concluded the former New York Fed President.<\/p>\n<\/blockquote>\n

    In July, Powell stated that the Fed would not wait for inflation to fall to 2% before beginning to ease policy.<\/p>\n

    Citi predicted the start of a Fed rate-cutting cycle at the September meeting.<\/p>\n

    Earlier, 10x Research reported expectations of Bitcoin returning to a growth trajectory amid easing inflation and the Fed approaching the start of policy easing.<\/p>\n","protected":false},"excerpt":{"rendered":"

    The Fed should lower rates, preferably at the meeting on July 31. This was reported by former New York Fed President William Dudley to Bloomberg. The ex-official acknowledged that he previously believed in maintaining monetary policy to combat inflation, but due to new circumstances, he has abandoned his former stance. The expert noted the impact […]<\/p>\n","protected":false},"author":1,"featured_media":15518,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"","news_style_id":"","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[1249,1224,1138],"class_list":["post-15519","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-federal-reserve-system","tag-macroeconomics","tag-opinions"],"aioseo_notices":[],"amp_enabled":true,"views":"5","promo_type":"","layout_type":"","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/15519","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=15519"}],"version-history":[{"count":0,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/15519\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/15518"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=15519"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=15519"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=15519"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}