As the economy continues to evolve, the Federal Reserve’s decisions on interest rates become increasingly crucial. In a recent interview, Yan Hootus of Goldman Sachs joined me to discuss the upcoming Personal Consumption Expenditures (PCE) report and its potential impact on the Fed’s future actions.
Hootus shared his insights on the expected PCE numbers, predicting a 26 basis point increase based on recent inflation data. He emphasized the importance of the market-based core PCE number, which excludes imputed prices like Financial Services, in assessing true inflation trends.
The conversation then turned to the possibility of rate cuts by the Fed. Hootus acknowledged the recent deceleration in the labor market but remained optimistic about the economy’s strength. He suggested that a couple of rate cuts by the end of the year could help rebalance risks and support economic growth.
When asked about the timing of potential rate cuts, Hootus mentioned September and December as likely months for action. He dismissed concerns about the proximity of the September meeting to the election, emphasizing the Fed’s focus on economic data rather than political considerations.
Looking ahead, Hootus highlighted the importance of the upcoming employment report in shaping the Fed’s decisions. He expressed confidence in the Fed’s ability to navigate economic challenges and make informed policy choices.
Overall, the discussion with Yan Hootus provided valuable insights into the factors influencing the Fed’s decisions on interest rates. As the economy continues to evolve, market participants will closely monitor upcoming data releases and Fed meetings for clues on future monetary policy actions.
