Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
Why Bill Dudley’s ‘Cut Rates Now’ Call Is A Non-Starter
You can't say Bill Dudley wasn't direct.
"I changed my mind," Dudley said Wednesday. "The Fed needs to cut rates now."
That was actually the title of an Op-Ed Dudley penned for Bloomberg Opinion.
In explaining his about-face, the erstwhile higher-for-longer advocate pointed to mounting evidence of a slowdown, including the yawning disconnect between the household and establishment surveys in the monthly jobs report, the JOLTS-derived openings-to-unemployed ratio (which he noted is back to pre
They could announce their intention to cut rates soon at the july presser. They could announce a date certain end of qt at the July meeting. Powell could follow up with a dovish speech at Jackson hole. Finally, they could wait until September and throw a fifty at that meeting. I would recommend all of the above.
If rate cuts take time to flow through the real economy and we’re already on the verge of a potential recession what good would even a 25bps cut do now? It would almost make more sense to wait until September and do something significant like a 50bps reduction which again might not do much in the short term but could have a medium to longer term impact.
Does that mean someone pushed the down button on the elevator? The Fed is looking for the stairs and the rest of us are just waiting for the ding and the doors to open.
Time to bring back Alan Greenspan’s crystal ball. At least it was clear they were winging it back then versus the current hand wringing over dot plots. I agree that a quarter point is already priced in and won’t make a hill of beans difference in where the economy is going. In my experience from the 70s the Fed has generally been behind the curve and too heavy handed when it finally is forced to act.