Federal Reserve Hawks Unite to Voice Concerns, Asset Price Plunge Risk Could Become a New Rate Cut Hurdle
BlockBeats News, November 21st, Financial Market Stability Concerns, including the risk of a sharp decline in asset prices, are becoming a new theme for Federal Reserve officials when discussing the timing of a rate cut or whether to cut rates at all. Federal Reserve Governor Lisa Cook outlined a series of financial system risks, including the rapid growth of the private credit market, hedge fund trading in the government bond market, and the use of generative artificial intelligence in algorithmic trading. Cook also suggested that she would not be surprised by a collapse in asset prices that are at historically high levels.
Cleveland Fed President Beth Hamack reiterated her opposition to further rate cuts, citing persistently high inflation and stating that she believes accommodative financial conditions are another reason to resist cutting rates.
Federal Reserve Governor Michael Barr said on Thursday that the Fed needs to be cautious when considering further rate cuts.
Meanwhile, Chicago Fed President Austin Goolsbee expressed concerns about another rate cut in December. "Inflation progress seems to have stalled, and if anything, has received a warning of moving in the wrong direction," Goolsbee said. "This makes me a little nervous."
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