WASHINGTON — Concerns are rising over the stability of financial markets, including the possibility of sharp declines in asset prices, as Federal Reserve officials weigh the timing and merits of further interest rate cuts. Some are questioning whether additional reductions are necessary at all.
During a lecture at Georgetown University on Thursday, November 20, Fed Governor Lisa Cook highlighted a series of risks facing the financial system. These include the rapid growth of private credit markets, hedge fund trading in equities, and the increasing use of generative AI in algorithmic trading.
Cook noted that she would not be surprised by a decline in historically high asset prices, which have supported overall consumer spending and the U.S. economy, emphasizing that such a drop does not necessarily indicate systemic financial instability.
Earlier on Thursday, Cleveland Fed President Loretta Mester reiterated her opposition to further interest rate cuts, citing persistent inflation and easy financial conditions as reasons to hold back. She warned that while rate reductions may be viewed as “insurance” for the labor market, such measures could increase risks to financial stability.
#FederalReserve #FinancialStability #InterestRates #AssetPrices #USMarkets #Inflation #LisaCook #LorettaMester #Economy #Washington
Post a Comment