Dudley, the former chairperson of the New York Fed, said he had switched from hawk to dove two weeks ago, abandoning his support for further rate rises in favour of an immediate rate cut to avert a recession. The longer the Fed waits, the more likely the damage will be, after more evidence of a weakening labour market and further moderation in inflation in the past two weeks. Fed members' estimates of the neutral rate range between 2.4 per cent and 3.8 per cent, meaning the effective federal funds rate of 5.3 per cent is still a long way from neutral. Once a recession materialises, the Fed needs to cut rates to 3 per cent or lower. The Fed is expected to cut rates by 25 or 50 basis points at its September meeting.