Former New York Fed President Bill Dudley is out with a new commentary today saying that the Fed needs to hike rates further.
“I think r* is a lot higher than the Fed recognizes — which means the central bank isn’t doing enough to fight inflation,” he writes.
The makes the case that r* — or the neutral rate — has ‘risen substantially’ since he was at the FOMC in 2018 and that monetary policy isn’t very restrictive.
He cites Q1 real final domestic sales at 3.1% and the Atlanta Fed Q2 tracker as reasons for concern. He also notes high stock prices and high US government spending
This article was written by Adam Button at www.forexlive.com. Source