The Federal Reserve announced that it will leave finance charge rates unchanged and comments from Fed Chair Jerome Powell made it clear that the Fed will most likely not make any cuts in March either. Many on Wall Street are reeling from this announcement, fueling the fire for more debates as to when the Fed will finally start cutting.
Lukasz Tomicki, LRT Capital Management Founder, joins Yahoo money management to give insight into Fed’s decision and what he feels is the most likely next move from policymakers.
Tomicki affirms that, despite what Powell said on Wednesday, the Fed would like to cut rates: “He set a very low bar for cutting finance charge rates. More of the same data for a few more months. We have to remember that the Fed works primarily from industry expectations, not just what happens to the fed funds rate. Since October, the long part of the yield curve has come in by 100 basis points and we have had incredible tightening in bond spreads. So, there is already loosening financial conditions that are feeding through the economy. Whether or not they cut actually in March or May, I think that’s a little less relevant, but all the bias is toward cutting rates now.”
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