Wall Street veteran David Zelbos added his name on Thursday to the list of potential Federal Reserve committees that the central bank believes are in the past to approve interest rate cuts.
Jeffries’ chief market strategist told CNBC that central bankers should not challenge the producer price index for July.
Instead, he actively advocated the Fed’s move as a way to prevent a slowdown in the labor market, in fact, helping to create jobs for a million people. In the last three Federal Reserve meetings, Zervos has advocated a point cut of half the federal funding rate, and has repeated his position during interviews.
“I’m still absolutely there. I think there’s a reasonable storyline, a very convincing storyline. This suggests that monetary policy is restrictive,” he said. “Generally speaking, there is no reason for this (PPI) number to change that view.”
The process, which only included three or four names to make Fed Chairman Jerome Powell successful when his term expires next year, has recently expanded to dozens.
Zervos is on a list that includes current and past Fed officials, at least one Trump administration adviser, and several other prominent Wall Street economists. Among the groups, Zervos and BlackRock Bond strategist Rick Rieder is the only one with a more focus on the market than economics.
“I think it’s an incredible advantage to have more market-friendly people who are familiar with the markets involved in monetary policy decisions,” Zervos said.
Earlier in the day, economist Mark Schmallin was on the list of finalists, and likewise supported a half-cut, saying the Fed was too conservative to fight inflationary combat.
President Donald Trump pushed hard to cut, repeatedly rampaging at Powell, suggesting that the Federal Open Market Committee should cut 3 percent (300 basis points) from its funding rate, which is currently around 4.33%.
“I don’t know I can reach 300, but I certainly could reach 200 and I was convinced that if I actually pushed up the idea that there’s a building up of fire pressure from the AI story and technology story, and the supply side stories, it was lower,” Zervos said.
Zervos added that he has not been blocked by the kind of criticism Trump levelled with the Fed.
“You go into that job where you fully understand that you are involved in the political process,” he said. “The goal is to drive discussion to facts and be driven by what is best suited to achieve the delegations set by Congress.”
