TechFlow news, on September 18, according to Jinshi Data, former New York Fed President Dudley wrote in his recent article that it makes sense for the Fed to aggressively cut rates by 50 basis points. Both goals of the Fed's dual mandate—price stability and maximum employment—have become more balanced, suggesting monetary policy should be neutral, neither restraining nor stimulating economic activity. However, current short-term interest rates remain significantly above neutral levels. This discrepancy needs to be corrected promptly.
A 50-basis-point rate cut would also align with the Fed's dot plot projections. Markets expect total rate cuts of at least 100 basis points by the end of 2024. If the Fed only cuts 25 basis points now and signals a 50-basis-point cut later this year, it would send a hawkish signal and raise market concerns about why the larger cut wasn't implemented immediately. A 50-basis-point cut in September would help the Fed avoid this dilemma.
