Former Fed economist Sam: The Fed should cut interest rates by 50 basis points
On September 16th, former Federal Reserve economist and chief economist at the New Century Advisors, Claudia Sahm, said in an interview last Friday: "Since the last Federal Reserve meeting, we have had two more months of good inflation data, which is what the Federal Reserve has been asking for."
However, the current issue is how much action the Federal Reserve should take. The financial markets, as a compass for the central bank's direction, have not provided any help in this regard. According to the Federal Reserve Observation Tool of the Chicago Mercantile Exchange, the futures market was focused on a 25-basis-point rate cut for most of last week, but on Friday, traders shifted to seeing a 25 or 50-basis-point rate cut as equally likely.
Sahm is one of those who believe the Federal Reserve should take more significant action. She said: "The inflation data alone is enough for us to cut rates by 25 basis points next week, and there will be a series of rate cuts after that." She believes the federal funds rate has already exceeded 5% and has been fighting inflation for over a year. She said: "The battle has already been won, and they need to start cutting rates. They should start with a 50-basis-point rate cut to prevent a potential labor market recession."
Sahm stated: "The labor market has become weak since last July, and Federal Reserve officials need to make a 50-basis-point rate cut and be prepared to take further action." (Jinshi)
