The Fed Wants to Apply the Brakes, Not the Gas!
Cleveland Fed President Beth Hammack said on Sunday that monetary policy is currently in a good position to pause. This means the Fed doesn't need to rush into taking new steps anytime soon.
Hammack said her main focus now is assessing the impact of previous interest rate cuts. She wants to see how the policies already in place are affecting economic conditions.
According to her, the total interest rate cuts that have occurred have reached 75 basis points (bps). The impact of these cuts has not yet been fully seen because monetary policy typically operates with a lag.
Therefore, Hammack said she will monitor the effects of the cuts throughout the first quarter. This period is considered crucial for assessing whether the economy responds as expected.
This statement reinforces the signal that the Fed is entering a "wait-and-see" phase. In this phase, the central bank tends to hold interest rates and await further economic data before making a decision.
If data shows inflation remaining low and the economy slowing down as targeted, the policy pause could continue. However, if inflation strengthens again or the economy overheats, the room for holding policy could become narrower.
In other words, the market now believes the Fed's next move will be highly dependent on data in the coming months. Hammack's statement sends a clear message: after a 75 bps rate cut, the Fed wants to confirm its impact before taking another step. (asd)
Source: Newsmaker.id
