Ahead of key economic data like Consumer Confidence and the Personal Consumption Expenditure (PCE) index due out this week, investors are still trying to gauge when the Federal Reserve will cut interest rates. Hopes for a rate cut as early as March have been dashed as Fed officials remain cautious. Moody’s Analytics Chief Economist Mark Zandi joins Yahoo Finance Live to discuss when would be a good time for the Fed to initiate rate cuts in 2024.
Zandi says that with the Fed having “more or less hit its targets” on inflation and unemployment in its dual mandate — “[achieving] full employment” and cooling inflation closer to 2% — he hopes rate cuts are coming soon. With both metrics currently at favorable levels, Zandi says now could be a good time to cut rates without “pushing the economy into a ditch,” referring to recession fears.
However, Zandi notes “the bar is higher” for the Fed, suggesting rate cut hesitation may stem from wanting even more “certainty” that markets will remain stable.
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