Fed Officials Cite Asset Price Crash Risk in Rate Cut Deliberations

Multiple Federal Reserve officials on Nov. 21 raised financial stability concerns, including potential sharp asset price declines, as a factor in rate cut timing, BlockBeats reports. Fed Governor Lisa Cook identified vulnerabilities including the rapidly expanding private credit market, hedge fund activity in Treasury markets, and generative AI use in algorithmic trading, while noting she would not be surprised by a collapse in elevated asset prices. Cleveland Fed President Beth Hammack reiterated opposition to further rate cuts due to persistent inflation and loose financial conditions, while Fed Governor Michael Barr said Thursday the central bank needs to proceed cautiously on rate reductions. Chicago Fed President Austan Goolsbee expressed concern about another December cut, stating inflation progress "seems to have stalled and, if anything, we've gotten warnings of it going in the wrong direction."