Former FED Vice Chairman Alan Blinder has given his insights on the FED’s monetary policy for 2024 in a recent interview. Blinder believes that the FED will continue to lower interest rates and predicts two rate cuts this year. He dismisses the possibility of the FED raising rates, calling it a “fantasy” and believes that past hesitations have influenced the current cautious approach. Blinder forecasts that the next rate cut will likely happen in September and December, with a potential earlier cut in July to avoid political influences.
Blinder also addressed concerns about inflation and the challenges faced by current economic models. He highlighted the need for adjustments but acknowledged that it will take time due to the complexities brought on by the pandemic. Additionally, Blinder discussed the FED’s dot plot tool, which reveals a split within the committee on interest rate projections. While not a strong supporter of the dot plot, Blinder sees its value in showcasing the diversity of views within the FED.
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