Is the Fed Going to Cut Rates, According to Former Vice Chair?
Former Federal Reserve Vice Chairman Roger Ferguson appeared on CNBC’s Squawk Box this week, expressing doubt that the Fed will cut interest rates at its upcoming meeting or even the one that follows.
According to Ferguson, the central bank is firmly in “wait-and-see mode,” prioritizing stability and caution as it watches inflation trends.
Fed Unlikely to Act Prematurely on Policy Shifts
Ferguson said the Fed is unlikely to adjust policy until inflation shows consistent progress toward its target. He warned that markets expecting imminent cuts may be disappointed by the Fed’s message this week, which he expects to emphasize a “vigilant and patient” approach.
“The Fed won’t move until the data tells a clearer story,” Ferguson stated. “They’re not ready to ease up yet.”
Soft Landing Hopes Remain—but Risks Linger
Ferguson acknowledged that the economy came close to achieving a soft landing this year—moderating inflation without harming growth or labor markets. However, he noted lingering uncertainty makes rate cuts in 2024 unlikely. If inflation continues to ease next year, a limited rate cut could come into play, but only under improved economic clarity.
Geopolitical Factors and Trump’s Strategy Surface
The discussion also turned to Middle East tensions and their potential impact on oil prices and inflation. Ferguson said recent oil price hikes have not yet hit core inflation, but that could change if the situation escalates.
Responding to comments made by President Donald Trump suggesting rate cuts now with room to raise later, Ferguson pushed back. He emphasized the risk of prematurely cutting rates if inflation proves stubborn, adding, “The Fed was behind the curve last time. They won’t want to repeat that mistake.”
Kosta Gushterov
Reporter at Coindoo
Kosta joined the team in 2021 and quickly established himself with his thirst for knowledge, incredible dedication, and analytical thinking. He not only covers a wide range of current topics, but also writes excellent reviews, PR articles, and educational materials. His articles are also quoted by other news agencies.
