The Federal Reserve has decided to keep finance charge rates steady as Wall Street speculates about the possible outcomes of a higher-for-longer environment. Moody’s Analytics Chief Economist Mark Zandi joins The Morning Brief to discuss the Fed’s policies and why the central money institution should begin cutting rates now.
Zandi explains that the Fed’s 2% inflation target is inappropriate at this moment: “If you were asking me de novo today without the legacy of that 2%, I’d say it should be closer to three. Just given that the underlying development rate of the economy is slower than when the 2% target was put into place, but I think the Fed officials want to get back to two, establish credibility, make sure that they’ve done what they said they were going to do.”
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