After the Federal Reserve Bank recently indicated that interest rate cuts might be coming in the future, markets boomed. Then, Fed governor John Williams of New York stepped in.
Is it fair to call him “the Grinch” that stole interest rate cuts? Guy Williams joined WWL’s Newell Normand this week to answer that question and more.
While Federal Reserve Chairman Jerome Powell did reference three possible rate cuts in the future, the Fed governor – who Williams’ referred to as a member of the bank’s “inner circle – said that rate cuts were not discussed at their latest meeting. He also said that core inflation is still higher than the bank would like to see.
Inflation has been high for more than a year as the U.S. and the world still reels from the economic impact of the COVID-19 pandemic. It rose again in November, according to the most recent Consumer Price Index report from the Bureau of Labor Statistics.
This makes things difficult for the Fed, which has been trying to bring inflation down with interest rate hikes. These hikes make it more expensive for Americans to borrow money and make them feel the sting of inflation even more.
Regarding John Williams’ comments, Guy Williams explained that “he’s trying to talk the markets off the edge and saying – you know, you guys are getting ahead of yourselves and a little bit,” and that he’s trying to “clean up” after Powell.
Normand also brought up a recent Wall Street Journal article that identified high housing costs as the final dragon that needs to be slayed in order to bring down inflation.
“There’s some people that spend up to half of their income on mortgage payments that are mortgage taxes. Insurance renter renters may face a similar burden,” Guy Williams said. He added that the cost to build a new house hasn’t come down and that local governments haven’t done much to make it cheaper. That’s likely the main remaining challenge that the Federal Reserve faces when it comes to finally reaching inflation goals.
Listen to the full episode here to learn more about what to expect from the Fed, as well as insurance lessons from California, Christmas holiday scams and doomsday prepping.