Expect Dissents at Latest Fed Rate Meeting, Duke Says

Summary

Former Fed Governor Betsy Duke discusses the upcoming FOMC meeting, arguing that while no rate change is expected, a quarter-point hike could be justified given solid growth and persistent above-target inflation. She also shares views on the neutral rate and the potential for dissents.

• Duke does not expect a rate change on Wednesday but sees a strong case for a quarter-point hike.
• The labor market is stable, economic growth is solid, and inflation has been above target for over five years.
• Current interest rates may not be restrictive, and a hike would reinforce the Fed's inflation-fighting credibility.
• She estimates the neutral rate around 4%.
• Globalization may now make inflation harder to control, reversing the disinflationary effects of the great moderation.
• A series of one-time shocks could accumulate and raise inflation expectations.
• The meeting minutes and press conference may reveal contentious debate and dissents.