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Lacker Sees Zero Fed Rate Cuts in 2024

Former Richmond Fed President Says Fed Can't Risk Whipsawing Markets Again

Jeffrey Lacker got it right back in March. This former president of the Federal Reserve Bank of Richmond told me after the FOMC meeting three months ago, when the Fed did not change rates after the inflation reports of the first part of the year showed that inflation had stopped falling and at best case had stalled out and at worst case might be higher, that the Fed needed to prepare the markets for the possibility of NO rate hikes this year.
And in fact, the Fed’s dots at today’s meeting showed the median forecast cut to just ONE rate cut this year. AND it showed there are now four of 19 FOMC members seeing ZERO cuts this year. Way to go Mr. Lacker.
He now sees a possibility the Fed will not see enough sustainable decline in inflation to cut rates next year either.
Jeff also did a deep dive into the Fed’s view that the neutral rate for the funds rate, R star, might be higher than the FOMC thought, which would mean the current level of the Fed’s key rate, the fed funds rate, might not be as “restrictive” as they thought. It’s a wonky and important concept. And he does a good job of explaining it, and making it interesting.
Take a deep dive into our interview, and hear, see what he has to say.

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Kathleen Hays Presents: Central Bank Central
Kathleen Hays Presents: Central Bank Central Podcast
Timely, in depth analysis of Federal Reserve policy and players, and of its central bank counterparts around the world that are driving global markets.