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Former Dallas Fed President Robert Kaplan believes that a half percentage point interest rate cut at the upcoming Federal Reserve meeting would be the optimal move. Kaplan stated that a more aggressive 50 basis point reduction would better prepare policymakers for the economic challenges ahead. Currently, there is speculation in the markets that the Federal Open Market Committee may approve the larger rate cut, with odds at 2-to-1 compared to the previously expected 25 basis point cut. Fed funds, the Central bank‘s overnight lending rate, currently stand at 5.25% to 5.50%. If the committee decides on the 50 basis point reduction, Kaplan suggests that Chair Jerome Powell should signal that future cuts will be more measured. Kaplan, who led the Dallas Fed from 2015-21 and now holds a position at Goldman Sachs, emphasized the importance of risk management in making the decision on Interest rates.

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