Former Federal Reserve Vice Chairman Roger Ferguson believes that lowering interest rates in the near future is unwise, given the current inflation trends and the state of the U.S. economy.
Interest Rate Cut Predictions
Ferguson stated on CNBC that expectations of multiple rate cuts this year are misplaced due to consistently high inflation pressures. He noted that the markets exhibit unwarranted optimism, stating that 'this market is in wishful thinking, hoping the Fed bails them out.'
Labor Market Shows Stability
Ferguson commented on March's labor market data, which was surprisingly strong. He pointed out that the economy continues to demand labor, though growth rates have slowed slightly. He remarked, 'This is not a weak economy,' and emphasized the significance of the 4% unemployment rate as a sign of stability.
Tariff Impacts on Inflation
In response to questions regarding whether tariffs imposed by President Donald Trump contribute to inflationary pressures, Ferguson indicated that both domestic price pressures and tariff policies play a role. 'I think we need to be very even in our assessment of where we are here,' he concluded.
Overall, Ferguson's insights highlight the need for the Federal Reserve to maintain its credibility in combating inflation and caution against hasty decisions.
