Investing.com — Former New York Federal Reserve President Bill Dudley expressed support for a 50 basis point interest rate cut, Reuters reported on Friday.
Speaking at the Bretton Woods Committee’s annual Future of Finance Forum in Singapore, Dudley said, “I think there’s a strong case for the 50, whether they’re going to do it or not.”
Dudley indicated that current rates are 150 to 200 basis points above the neutral rate, where monetary policy is neither restrictive nor accommodative, the report added.
Previously, Dudley had spoken of a rate cut from July.
Discussing next steps, HSBC economists yesterday said:
“We expect the FOMC’s median estimate of the federal funds rate target range at the end of 2024 to decrease to 4.50-4.75% (from 5.00-5.25% previously), in line with our forecast of 25bp rate cuts in September, November, and December.
“The latest inflation data came in slightly higher than we expected, providing FOMC policymakers with another reason to start with a smaller initial rate cut of 25bp, rather than a larger move of 50bp.”
On the other hand, Wells Fargo economists noted that the Fed will likely reduce borrowing costs by 25 basis points at the central bank meeting next week.
In the next nine months or so, analysts believe the FOMC will announce 225 basis points in cuts.
Senad Karaahmetovic contributed to this report.
