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Former Fed "Hawk King": Inflation will slow down, allowing the Federal Reserve to further cut interest rates

Former Fed "Hawk King": Inflation will slow down, allowing the Federal Reserve to further cut interest rates

Bitget2025/02/03 14:06

Former St. Louis Fed Chairman Brad stated that inflation will significantly slow down this year, allowing the Federal Reserve to continue lowering interest rates.

In an interview last Friday, Brad predicted that by the end of 2025, the Federal Reserve's preferred core personal consumption expenditure inflation would drop from 2.8% at the end of last year to 2.3%.

Brad said: "I think the basic situation is that inflation will continue to approach a target of 2%, but it will remain above 2%." Inflation only slightly decreased last year. The core personal consumption expenditure index slid from 3% at the end of 2023 to 2.8%. Brad said: "The decline is not significant."

He agreed with economists' views that the storm of inflation has ended and stated that the Federal Reserve has successfully dealt with price surges after the pandemic in 2020 without causing an economic recession. He added that now, The Fed is in a phase of fine-tuning its policies.

Brad said it seems likely for The Fed to cut interest rates twice more this year, each time by twenty-five basis points. Officials had anticipated two rate cuts in December last year. "I really don't see any factors preventing them from doing so," he said.
However, Brad indicated another rate cut in March might be too early; he believes there may not be a reduction then based on current circumstances.
He suggested using March's meeting as preparation for potential cuts towards late spring and mentioned further policy actions depend on additional progress regarding inflation.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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