It's 'absolutely essential' that the Fed be independent of 'day-to-day politics': Ex-Fed president

Core Viewpoint - Wall Street is anticipating a quarter-point rate cut from the Federal Reserve, with some hoping for a half-point cut, following recent inflation data showing a drop in wholesale prices and a significant rise in consumer prices [1][2][3]. Summary by Sections Federal Reserve Rate Decision - The final inflation data before the Federal Reserve's upcoming meeting indicates a surprise drop in annual wholesale prices, while consumer prices have seen their largest annual increase since January [1]. - Investors are largely expecting at least a quarter-point rate cut, with discussions around the potential for a half-point cut [2][3]. - The Federal Reserve is likely to implement a 25 basis points cut at the next meeting, with future intentions indicated in a dot plot for subsequent meetings [3][4]. Economic Context - The current economic landscape includes weak job data and revisions, which support the case for a rate cut [3]. - If the Federal Reserve suggests two more rate cuts, Wall Street anticipates an additional 25 basis points cut in October and another in December, totaling a 75 basis points reduction by year-end [4]. Federal Reserve Leadership - James Bullard, a candidate for the next Federal Reserve chair, confirms discussions with Treasury Secretary Scott Bessant regarding his candidacy [5][6]. - There are criticisms regarding the timing of rate cuts, with some arguing that the Federal Reserve was slow to respond to inflation surges in 2021, 2022, and 2023 [7][8][9]. - The Trump administration's attempt to remove Fed Governor Lisa Cook has raised questions about the independence of the Federal Reserve, with legal proceedings ongoing [11][12][13]. Federal Reserve Independence - The importance of the Federal Reserve's independence from political influence is emphasized, with a call for clear definitions regarding the roles and protections of committee members [12][14][15]. - Maintaining the Federal Reserve's operational effectiveness and independence is deemed essential for sound monetary policy [15][16].