Markets (^DJI, ^IXIC, ^GSPC) and investors are now turning their backs on the likelihood of the Federal Reserve cutting interest rates in June. Select Wall Street experts are gripped by uncertainty and even believe a rate hike cut be next.
State Street Global Advisors Chief Economist Simona Mocuta details the broader consequences of the Fed holding rates too high for too long.
"We heard from the Fed earlier that disinflation is reason enough for rate cuts and you don’t need to be at your target in order to begin the cutting cycle because we know it’s a long process for these rate cuts to work through the economy," Mocuta tells Yahoo Finance. "The idea of the long lags, the idea of controlling the narrative, I think it’s a mistake for the Fed to tie itself so tightly to any monthly data point… That is how the market may operate and even that is not always wise. But that’s not how monetary policy should operate and I think the focus should be much more on the longer-term trend which remains one of disinflation."
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