Former Fed Vice Chairman Richard Clarida said in March that market expectations for a rate cut were reasonable.
Former Fed Vice Chairman Richard Clarida said market expectations for US interest rate cuts in March were understandable, given a scenario where there was a “soft landing” and the central bank was confident it was reining in inflation.
“A cut in March, or at least a strong indication that cuts are imminent at the March meeting, makes sense,” Clarida, global economic adviser at Pacific Investment Management Co., said in an interview.
Clarida also said that economic dynamics could change, a faster slowdown in inflation would raise the possibility of rate cuts, while persistent price pressures could be delayed much later in the year or beyond.
Clarida’s comments came as investors debated when the Fed will ease its monetary policy and whether the world’s largest economy can emerge unscathed from the harshest rate hike cycle since the 1980s. The first 25 basis point cut is expected to arrive, possibly by the end of March.
Clarida said 10-year Treasury yields are likely to move in the range of 3.25 percent to 4.25% this year.