Federal Reserve Should Consider 50 Basis Point Rate Cut Amid Positive Inflation Data, Says Economist Claudia Sahm

COINOTAG news, September 16, in a recent interview, former Federal Reserve economist and New Century Consultants chief economist Claudia Sahm asserted, “Since the last Fed meeting, we’ve witnessed two months of favorable inflation data, aligning with the Fed’s objectives. However, the decision-making dilemma revolves around the extent of the Fed’s next move.” The financial markets, typically a guide for central bank policy, have not provided clear indications. According to the CME’s FedWatch tool, the focus was on a 25 basis point rate cut for most of last week, but by Friday, traders considered both 25 and 50 basis point cuts to be equally plausible. Sahm, advocating for bolder measures, stated, “The inflation data justifies a 25 basis point rate cut next week, followed by additional cuts. Since July of last year, the labor market has shown signs of weakness, necessitating a 50 basis point rate cut to avert a potential recession and prepare for further strategic actions.”