Ahead of the Fed’s 25 basis point interest rate cut, which is expected to be announced within minutes, Kevin Hassett, who is expected to be the new Federal Reserve Chairman and is expected to be the new Fed Chairman, has made some very important and noteworthy comments on monetary policy that have caught the attention of the market.
White House National Economic Council Director Hassett said futures markets are pricing in a 25 basis point rate cut, calling it “a small step in the right direction.” But Hassett says the Fed’s work doesn’t end there. In a statement, he suggested the central bank may need to take more aggressive action and called for a 50 basis point (bp) rate cut by the Fed.
Hassett argued that strong economic data could support such a rate cut, saying, “It’s entirely possible that the Fed could cut rates by 50 basis points or more.” He also said a decision on who the new Fed chair will be will be announced by the president within the next week or two.
Meanwhile, market commentators have suggested that the Fed’s rate cuts could be “hawkish.” According to JPMorgan’s assessment, this hawkishness can manifest itself in two ways:
- The dot plot shows that the Fed is expected to cut interest rates only once next year.
- Federal Reserve Chairman Jerome Powell stressed that inflation concerns remain and did not commit to further rate cuts in the future.
*This is not investment advice.
