The United States economy is facing a challenge as GDP growth slowed down to 1.6% in the first quarter, marking the smallest increase in over two years. Despite this, the Federal Reserve has opted to hold off on making any changes to interest rates as they continue to monitor inflation data, which remains difficult to predict. Wall Street experts are debating the possibility of rate cuts by the Fed, with some unsure if cuts will even happen in 2024 and others suggesting that rates could potentially increase.
Recently, Professor Jason Furman from Harvard University’s Kennedy School of Government spoke with Yahoo Finance about his perspective on the economy and the potential for rate cuts by the Federal Reserve. Furman highlighted that core PCE inflation, closely monitored by the Fed, rose to a 3.7% annual rate in the first quarter, far exceeding previous expectations of 2.1%. This unexpected jump has raised concerns about inflation and makes it unlikely that the Fed will enact rate cuts anytime soon unless there is a significant decline in job market activity.
Furman emphasized that only a drastic deterioration of the job market would be enough for the Fed to consider cutting rates before year’s end. To stay informed on expert analysis and market trends, viewers can watch Furman’s full episode for more insights on this topic.
