Fed nominee Judy Shelton calls for 50 basis point cut

Judy Shelton advocates for a 50 basis point cut but markets ignore the hype.
Markets are in consolidation, confined to familiar ranges.

Judy Shelton who is an economic advisor to President Donald Trump and known for her advocacy for a return to the gold standard and for her criticisms of the Federal Reserve was nominated earlier this month by Trump to the Federal Reserve - Indeed, Shelton’s views on US interest rates echo Trump’s repeated calls for the Fed to lower them. In fact, she believes interest rates should be cut to zero.

In recent trade, an article, published by the Washington Post, reports that Shelton is calling for a 50 basis point cut at this month's Federal Open Market Committee meeting.

“I would have voted for a 50-basis point cut at the June meeting,” she said in an email.

The article notes that Wall Street's traders have been anticipating a more modest 25 basis point cut when the Fed meets to set interest rate policy on July 30 and 31, but Shelton said there is justification for a deeper cut, citing weak economic conditions overseas.

“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 said.

Meanwhile, there are no surprises for the markets in such an article, as it is widely expected for such heads in the industry to voice such opinions so close to the event. The stock market is in consolidation and the Dollar is supported more so by Friday's rally on the back of Fed dove Bullard who said an easing now would be insurance against a slowdown, favouring a 25bp cut (rather than 50bp), while not expecting the Fed to be entering into an easing cycle.

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