Consumers, investors, and the market itself are all tuned into inflation’s increasingly apparent presence in 2024, drawing even more attention on when the Federal Reserve will finally pivot and start cutting interest rates.
Former Federal Reserve Bank of Richmond President Jeffrey Lacker sits down with Yahoo Finance to talk about why he thinks the Fed is "a bit over their skis" and if inflation persists, it’s possible that officials may not issue "any rate cuts in this year at all."
"Policy needs to be restrictive enough. The key with monetary policy is always in a situation like this, is encouraging people to delay spending because it’s the excess of spending over the economy’s capacity that drives inflation," Lacker, currently the Senior Affiliated Scholar at the Mercatus Center, says. "You don’t need to reduce spending so much as to cause a recession, but you do need to restrain it enough. The signs are there’s a good chance that Fed policy isn’t terribly restrictive right now, and isn’t going to do the trick in getting inflation down."
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