A hot economy isn't a good reason for the Fed to 'drag its feet' on rate cuts, former central bank economist says

Wed, 02/14/2024 - 13:55

In this photo taken while zooming with a slow shutter speed Federal Reserve Board Chair Jerome Powell speaks during a news conference about the Federal Reserve's monetary policy at the Federal Reserve, Wednesday, Dec. 13, 2023, in Washington. — Jerome Powell could be adding more risk of a recession by not cutting interest rates, according to Claudia Sahm.
Alex Brandon/AP Photo

The Fed adds to recessionary risk if it stalls rate cuts, Claudia Sahm wrote in the Financial Times.
High rates have already strained markets, and risk damaging the economy.
The Fed doesn't need to crack the jobs market to bring inflation down, she said.

Strong labor and inflation conditions shouldn't stall interest rate cuts, and a higher-for-longer policy only compounds distress in the US economy, Claudia Sahm wrote in the Financial Times.