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  • Dudley Says Fed Is Going to Cut Rates in 2024

Dudley Says Fed Is Going to Cut Rates in 2024

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Moomoo News Dec 14, 2023 05:47 · 10.8k Views

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  • 00:00 Do we sustain this market reaction, this belief in America
  • 00:05 or do we, are we in set for some
  • 00:08 Titanic disappointment?
  • 00:11 Well, I think that Powell's press conference made clear that he's really pleased by how the economy's performed, the fact that you could get inflation down without the unemployment rate going up.
  • 00:20 He's had some moderation in wages.
  • 00:22 He thinks everything is going really, really well, and I think that's true.
  • 00:26 The question is whether it's going to continue or not.
  • 00:28 And there are definitely things that can go wrong.
  • 00:30 One thing that can't go wrong is the Fed keeps monetary policy too tight for too long and we have weaker economy.
  • 00:35 Another thing that can go wrong is the Fed can ease policy prematurely,
  • 00:39 or
  • 00:40 the market itself can ease financial conditions prematurely, which will stimulate the economy and make it so that the Fed can't cut rates as quick
  • 00:47 at all, as quickly as the market expects.
  • 00:49 I think the market's getting a little have itself here
  • 00:52 in in a sense of
  • 00:53 taking the feds optimism and translating that into very large reductions in short term rates in 2024.
  • 01:00 What do you think happened to the Chairman Powell of only two weeks ago?
  • 01:05 Think that they're very happy with how the economy's were formed.
  • 01:07 I mean, basically
  • 01:08 they've had decent growth.
  • 01:10 Unemployment rate stable and inflation has come down a lot
  • 01:13 and that's basically,
  • 01:15 you know, as good as it can get.
  • 01:17 And that's really that's what's just summarized in the summary of economic projections.
  • 01:20 Now summary of economic projections shows a very modest increase in the unemployment rate from here
  • 01:25 and essentially a soft landing kind of forecast.
  • 01:28 Now soft landings are really difficult to pull off and they're particularly difficult to pull off when you've been very late to take monetary policy.
  • 01:35 And what's allowed this to happen
  • 01:37 is that there were supply disruptions, there was
  • 01:39 reduction in labour supply.
  • 01:41 Also things have reversed and that's made the fifth job a lot easier.
  • 01:45 Build the prospect of getting sticky inflation
  • 01:47 into next year, getting stuck at 3.
  • 01:49 It's amazing because six months ago, Bill, we were told that the last mile was difficult.
  • 01:53 It was hard.
  • 01:54 Then Secretary Allen starts sounding like the Fed chair again, saying it's not that hard.
  • 01:58 You hear it from Chairman Powell, didn't get any indication it would be particularly difficult into next year.
  • 02:03 Do you think that is the prudent approach
  • 02:05 to what 2024 could look like?
  • 02:07 I think he's telling telling you what he really thinks.
  • 02:10 I think he's very happy with how things have performed
  • 02:12 and he he didn't say it would necessarily continue but he also said it that he was hopeful that these trends will continue into 2024.
  • 02:20 My own view is that
  • 02:21 the Fed is going to be cutting rates in 2024.
  • 02:25 We're clearly done in terms of rate hikes.
  • 02:27 You know the the the possibility of another rate hike is really low at this point.
  • 02:31 The question is really just timing of rate cuts
  • 02:35 and magnitude.
  • 02:35 And that's going to be basically
  • 02:37 be driven by the strength of the economy,
  • 02:39 pressure on resources and what actually happens to services inflation at this point.