Top Fed official calls talks of March interest rate cut 'premature'
Economist Peter Morici reacts to the Fed signaling that it could cut interest rates three times in 2024, on 'Varney & Co.'
New York Federal Reserve President John Williams pushed back against growing market expectations for interest-rate cuts, calling talks of a March reduction «premature.»
«We aren’t really talking about rate cuts right now,» Williams said Friday during an interview on CNBC. «We’re very focused on the question in front of us, which is, have we gotten monetary policy to a sufficiently restrictive stance in order to ensure that inflation comes back down to 2%? That’s the question in front of us.»
His comments come just days after the Fed signaled that its nearly two-year fight against inflation is finally coming to an end as it forecast a series of rate cuts in 2024. Markets surged as the central bank penciled in three rate cuts in 2024, with the Dow Jones Industrial Average topping 37,000 on Wednesday for the first time ever.
FED'S FIGHT AGAINST INFLATION IS WEIGHING ON MIDDLE-CLASS AMERICANS
Traders began betting on even more aggressive rate cuts, starting as early as March, but Williams sought to temper some of those expectations on Friday.
«I just think it’s just premature to be even thinking about that,» Williams said when asked about the possibility of a March rate cut.
Despite that, about 73% of investors are still pricing in at least a quarter-point cut in March, according to the CME Group's FedWatch tool, which tracks trading.
Updated quarterly economic projections laid out after the Fed's meeting on Wednesday show that a majority of FOMC officials expect rates to fall to 4.6% by the end of 2024, suggesting that there will be at least three quarter-point rate cuts next year.
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