Bill Dudley critiques Federal Reserve’s 25-basis-point hike as too small

Bill Dudley, the former president of the Federal Reserve Bank of New York, isn’t impressed with the central bank’s latest move. Speaking on Bloomberg on September 17, Dudley called the Fed’s freshly announced 25-basis-point rate hike “too small,” arguing that the Federal Open Market Committee should have been more aggressive in its fight against persistent inflation. The FOMC wrapped up its two-day meeting on September 17, delivering the widely expected quarter-point increase that pushed the federal funds rate target to 3.75%-4.00%. The case for more hawkishness Dudley’s argument boils down to a simple read of the data. August’s core CPI posted a 0.3% month-over-month increase, a figure that suggests inflation isn’t retreating as quickly as the Fed’s 2% target would require. In Dudley’s view, another rate hike is “in order unless the data changes pretty dramatically.” He projects two cumulative 25-basis-point hikes by year-end, drawing on historical patterns where solitary rate increases are seldom the final move in a tightening cycle. The FOMC’s own updated economic projections hint at least one more increase before 2026 closes out and signal a more gradual path toward the 2% infl...