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Mincing no words, Vanguard chief economist slams Fed for failure to make hard data the basis of massive rate cut

Roger Aliaga-Diaz says that such a 'rare measure' by Fed Chairman Jerome Powell was likely used 'prematurely' and could send just the 'wrong signal'

Author Brooke Southall March 3, 2020 at 7:23 PM
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Roger Aliaga-Diaz: The high uncertainty around the potential implications of the coronavirus warrant further assessment before taking action of such magnitude.

The Vanguard Group


Federal Reserve


Jerome Powell

Matt Crow

Matt Crow

March 3, 2020 — 9:20 PM
It's hard to imagine a scenario in which we'll look back approvingly on today's Fed action. Much of the U.S. market was trading above the 200 day moving average ten days ago, such that all of this could be described as profit-taking. Now the 10 year is trading in basis points, which will encourage lots of refi-activity, which banks will staff up and feed on until the 10 goes back to 1.5%, loan issuance stops, NIMs get crushed, and bank earnings dissolve. Then what?

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