Fed sparking irrational market optimism over potential rate cuts, former FDIC Chair Sheila Bair warns
Publishing timestamp: 2023-12-18 10:57:37
Summary
Former FDIC Chair Sheila Bair believes that market optimism over potential interest rate cuts next year is overdone. She criticizes Federal Reserve Chair Jerome Powell for being irresponsibly dovish and creating "irrational exuberance" among investors. Bair argues that the focus should still be on inflation and worries that the Fed is pivoting towards worrying about a recession when there is no data to support that risk. She believes that the market's bullish reaction to the Fed is a mistake and that significant lowering of rates in 2024 could be problematic. Bair sees prices for services and rental housing as sticky spots and expresses concerns about deficit spending, trade restrictions, and an aging population creating inflation pressures. She believes that rates should stay put and that patience is needed to see how the situation plays out.
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