Former Fed Vice Chairman Urges Rate Cut: Inflation Slides, Maintaining Stable Interest Rates Crucial
Publication Time:2024-09-06 19:56:08
In the context of current circumstances, the importance of the Federal Reserve adjusting interest rates was highlighted by senior research fellow at the Brookings Institution and former Vice Chairman of the Federal Reserve, Donald Kohn, at the Sixth Bund Financial Forum. Faced with a decline in inflation, Kohn believes that maintaining interest rates within a certain period of decrease is essential to maintaining the health of the economy. He explains that with the decrease in inflation indicators, it is not reasonable to continue policy at its current restrictive level. Regarding the magnitude of the rate cut, whether it be 25 or 50 basis points, the key lies in initiating the cut and clearly communicating this intention. Kohn notes that although he himself is uncertain about the specific size of the cut, the upcoming labor market data (the non-farm payroll report for August released on September 6 Beijing time) will provide the Fed with the basis for their decision-making. It is expected that the Fed may take action of either 25 or 50 basis points in September, but the most likely scenario is a 25 basis point adjustment.
rate cut
Federal Reserve
Inflation
interest rate adjustment
economic stability