Expert Says Federal Reserve Needs More Data Before Slashing Rate: 'As Badly As They Want To Cut, They Can't'

Founder and CEO of KKM Financial, Jeff Kilburg shared his perspective on the Federal Reserve’s challenges in cutting interest rates. He highlighted the complexities faced by the Fed, referencing comments from Janet Yellen about vulnerabilities in AI stocks.

What Happened: On Thursday, during CNBC’s “Last Call,” Kilburg highlighted that with core inflation nowhere close to the set 2% mark, the Federal Reserve needs more data before it can initiate a rate cut in December.

“As badly as they want to cut, they can’t,” he said emphasizing the difficulties the Fed encounters in making rate cuts.

“Janet Yellen even came out and said… maybe we need to look into some of the vulnerability in the AI stocks.”

Kilburg’s comments come amid ongoing discussions about the Fed’s monetary policy and its potential impact on various sectors, including AI stocks.

See Also: Economic Fears Lift Bonds: TLT ETF Breaks 2024 Downtrend As September Rate Cut Hopes Surge Ahead Of Jobs Data

Why It Matters: The Federal Reserve’s decisions on interest rates have significant implications for the economy. Recently, Goldman Sachs adjusted its forecast for the Fed’s first rate cut, pushing it back from July to September. This revision reflects the need for substantial improvements in inflation and labor market data before any cuts can be made.

Economist Mohamad El-Erian expressed similar sentiments, stating that the Fed is “traumatized” by its 2021 mistakes and may delay rate cuts despite the need for them. He suggested that the Fed should start cutting rates in July, but acknowledged the central bank’s cautious stance.

Additionally, the recent rate cuts by the Bank of Canada and the European Central Bank have put pressure on the Fed to follow suit. Both central banks reduced their policy rates by 25 basis points, signaling a shift towards easing monetary policies.

Read Next: Indian Stocks Tumble The Most Since March 2020 With Modi’s Party Set To Lose Majority

Photo via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari