Comments from Bill Dudley
An opinion piece from former New York Fed President Bill Dudley is doing the rounds, warning that a cut tomorrow probably won't be the first of many.
" I think there's a good chance the Fed won't be cutting further anytime soon," he wrote.
Dudley highlights the risks of stimulating an economy that's growing at an above-trend pace and pushing markets to new "and perhaps unsustainable" highs.
He warns that if economic worries turn out to be unfounded and inflation accelerates, the Fed may be forced to reverse course. Dudley highlights that he's especially worried because the latest data has been stronger than expected.
All told, the case for lowering rates is less compelling now than it was when the Federal Open Market Committee last met in June. This doesn't necessarily mean that an interest-rate decrease this week would be a mistake. But it does mean that market participants -- who are expecting a series of cuts over the next year or so -- might be in for an unpleasant surprise, because the Fed's future moves will be more dependent on incoming economic data than they think/
Don't say you weren't warned.
