One of the big questions on Wall Street: When will the Federal Reserve start cutting interest rates. Fed leadership continues to keep an open mind as economic headwinds also continue to develop. The New York Times Columnist Paul Krugman joins Yahoo Finance to give insight into the Fed’s potential decisions and why he feels its time for the central bank to start cutting rates.
Krugman affirms: “It’s definitely time for the Fed to cut rates. I’d like to compare that the economic numbers look a lot like they did in late 2019. The unemployment rate is about the same. The underlying inflation is just slightly higher, but very close to the Fed’s 2% target now. The Fed’s forecast of inflation for the next year is just slightly higher than it was, but the Fed funds rate was 1.75% in late 2019 and it’s 5.5% now. It’s very hard to justify, given that inflation has collapsed. The war on inflation is suddenly over, we won. It’s very hard to understand why the rates should stay where they are now.”
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home prices are up 40% since the pandemic
Krugman is a major liberal and he wants rates to be cut to help Biden in an election year. It has nothing to do with the economy.