The United States GDP (gross domestic profit) grew by only 1.6% in the first quarter, marking the smallest increase in over two years. The Federal Reserve appears to be waiting for more inflation data before making any decisions about interest rates, which they have decided to keep at their current levels due to the difficulty in accurately predicting inflation. Wall Street experts have been debating when the Fed will potentially cut rates, if it will happen in 2024, and the slim chance of rates being raised.
Harvard University’s Kennedy School of Government Professor Jason Furman recently spoke with Yahoo Finance about his perspective on the economy and his thoughts on whether the Fed will follow through with any rate cuts this year. Furman highlighted the surprise of core PCE inflation in the first quarter being at a 3.7% annual rate when it was previously expected to be at 2.1%. This unexpected increase is causing concern for the Fed, making it unlikely for them to cut rates anytime soon.
Furman, who served as the Council of Economic Advisors Chair during the Obama Administration, believes that the Fed will only consider cutting rates before December if there is a rapid deterioration in the job market. He emphasized that such a scenario is not what he expects or hopes for, but it is a contingency that could prompt the Fed to make changes to interest rates. For more expert insights and the latest market updates, viewers can watch the full episode by clicking the link provided.