President Donald Trump’s prospective nominee to the Federal Reserve, Judy Shelton, is calling for the Fed to lower interest rates by 50 basis points at its upcoming meeting on monetary policy.
“Even a 50-basis point reduction would still keep the Fed funds rate well above zero,” Shelton told The Washington Post in an email. “I would have voted for a 50-basis point cut at the June meeting,” she added.
The Fed is scheduled to meet between July 30 and July 31, at which point the central bank is expected to lower rates. Market expectations for the Fed to lower interest rates by 25 basis points are at 77.5%, according to the CME Group’s FedWatch tool. Expectations for a 50 basis-point cut are at 22.5%.
If the central bank lowers rates, it would do so at a time when weaker economic activity from overseas is dampening the outlook on the U.S. economy. Other central banks are also lowering, or preparing to lower interest rates. These conditions, Shelton argued, are enough to justify a deeper cut in rates than the market is pricing in.
“I do think global conditions and the clear monetary paths being signaled by other central banks are a factor in considering how much our own Federal Reserve might choose to lower on July 31,” Shelton told the Post.
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