Former NY Fed President Bill Dudley is continuing his dovish shift. Until two weeks ago, he was arguing for a higher-for-longer Fed but changed his mind late in July and called for a cut.
Now, he's continuing with that and is out with a column that says the Fed "needs to get to neutral".
"Federal Open Market Committee members’ estimates of the neutral interest rate range between 2.4% and 3.8% (I’d put myself in the top half of that range). This means there’s a long way to go from the current effective fed funds rate of 5.3%. And if a recession materializes, the Fed will need to go into accommodative territory — to 3% or less."
He says an immediate rate cut is in order but is 'very unlikely'. To get to neutral he says the Fed could cut 25 or 50 bps in September and continue from there depending on the data.
----
I don't see these comments as anything groundbreaking but they emphasize the catalyzing pressure on the Fed.
