Macro Hive Conversations With Bilal Hafeez
Ep. 199: Dominique Dwor-Frecaut on Fed Slashing Rates and Trump Winning
Jan 19, 2024
Dominique Dwor-Frecaut, Chief US economist and macro strategist, discusses the Fed's shift in view on interest rates, the impact of supply shocks on inflation and unemployment, the reasons behind the Fed's decision to cut rates, the fiscal deficit and its impact on markets, and personal interests and TV shows.
25:05
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Quick takeaways
- Dominique predicts a more aggressive approach by the Fed with a 50 basis points rate cut in March and additional cuts throughout the year.
- Dominique argues that the recent decline in core PC inflation and energy prices has shifted the focus of the Fed towards the risk of persisting low inflation, justifying the need for preemptive cuts.
Deep dives
Dominique D'Orfico's Shift in View on the Fed
Dominique D'Orfico, previously known as a hawk on the Fed, has now become dovish. She predicts that the Fed will lower rates by 50 basis points in March, with additional cuts in the first half of the year. This is a more aggressive view compared to the market consensus of 25 basis points cut over 12 months. Dominique's change in view was influenced by Chair Powell's guidance, which focused more on actual inflation data, specifically core PC. She believes that the risk of low inflation is present, and preemptive cuts are necessary to prevent it from taking hold.
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