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This week, FS Investments Chief U.S. Economist Lara Rhame discussed Federal Reserve Chairman Jerome Powell’s public update on interest rate cuts.
In his latest remarks, Powell explained that the Fed is preparing to start reducing rates but that a March cut would not be likely. He indicated that before the Fed lowers interest rates, data must show that inflation is moving toward the two percent level. Currently, the inflation rate sits at 3.4 percent.
On Fox Business’s “Mornings with Maria” show, Rhame unpacked Powell’s speech. Host Maria Bartiromo asked Rhame, “Do you translate that into a cut in the second half of the year?” Rhame replied, “I do. I think that the Feds are going to have to be very surgical here and very date-dependent when it comes to cutting rates.”
Whether inflation will drop to two percent is heavily debated on the show, with concerns surrounding conflicts in the Middle East and an increase in CPI inflation.
Rhame explained that inflation is “still so sticky,” elaborating, “I think there’s going to be a question here. The headline is kind of coming back into two percent while the mix behind the headline looks really different than it did pre-Covid.” She said, “Do they focus just on that headline, or do they really dig into the details?”
With the 2024 presidential election around the corner, inflation is an important issue.
According to Business Insider, rising inflation and unemployment rates are among the reasons Americans are dissatisfied with Biden’s policies and President Trump’s popularity continues to rise.