Concerns are being raised throughout Wall Street over the Federal Reserve keeping interest rates steady for much longer than anticipated. Some of these concerns stem from Fed Chair Jerome Powell’s recent comments on Tuesday that the FOMC will need “greater confidence that inflation is moving sustainably toward 2% before it would be appropriate to ease policy.”
ITR Economics Economist Lauren Saudi-Baker joins Yahoo Finance to give insight into Powell’s recent comments, how the Fed could act moving forward, and what it could mean for the overall market.
Saudi-Baker elaborates on what will make the Fed more confident in cutting interest rates: “I think what’s more important, even than the headline CPI number, is the wage inflation data. So, the Fed does want to see the labor market cool off. Wage inflation has been one very sticky aspect of inflation. We see a lot more cooling in, say, the goods side of the world than we do in the service sector. So, service costs need to come down. Wages do need to cool off a bit. “