Bloomberg Talks Former NY Fed President Talks This Week's Policy Decision
Sep 15, 2025
Bill Dudley shares insights on the Federal Reserve's expected interest rate cuts and their implications for the economy. He explores the challenges facing the labor market and the steepening yield curve. The discussion highlights the tension between inflation concerns and employment dynamics. Dudley also delves into the internal dynamics of the Fed, revealing how diverse opinions shape monetary policy decisions. Listen to understand how these factors influence future economic forecasts and rate decisions.
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Quarter-Point Cut Priced In
- Bill Dudley expects a 25 basis point Fed cut this Wednesday and says it's "baked in the cake."
- He'd be surprised if the Fed did anything else at this meeting.
Labor Market Weakness Is Driving Cuts
- Dudley points to labor market softness as the main driver of the Fed's shift toward cuts.
- Payroll growth has slowed heavily and many labor indicators show continued deterioration.
Markets May Be Too Aggressive On Cuts
- Markets price steep cuts through 2026 and 2027, with fed funds futures near 3% by end of next year.
- Dudley cautions markets may be ahead of themselves given accommodative financial conditions and sticky inflation risks.