Moody\’s chief economist warns: The Fed better cut interest rates as soon as possible!

Mark Zandi, chief economist at Moody\’s Analytics, said the Fed had better cut interest rates as soon as possible because if rates don\’t fall, some parts of the economy risk collapsing

Mark Zandi, chief economist of Moody\’s Analytics, said that the Federal Reserve had better cut interest rates as soon as possible because if interest rates do not fall, some parts of the economy are at risk of collapse.
Zandi said in an interview last Thursday that if the Fed does not lower interest rates in the next few months, there may be a series of consequences.
He warned that maintaining interest rates at current levels increases the risk of recession and could expose other cracks in the financial system.
Top economist says: Interest rates are corrosive to the economy.
They consume the economy. And at some point, there may be problems in some links.
The risk now (for the Fed) is that officials weaken the economy and cause a recession.
If I could make the decision one day, I would choose to cut interest rates now because I think the economy really needs this kind of relief.
Zandi pointed out that although the strength of the economy shows that the United States is still some distance from falling into recession, higher interest rates have begun to have an impact on the economy.
He noted that rising borrowing costs have led to sluggish loan growth and are eroding credit conditions, which could put pressure on banks\’ balance sheets.
Zandi pointed to the collapse of regional banks last year. The initial collapse of Silicon Valley Bank triggered a brief banking crisis that led to the collapse of two other banks.
He said: With interest rates continuing to be high, this is the kind of thing that worries me.
With borrowing costs remaining high, other market commentators have also warned of the potential for more banking turmoil.
Billionaire investor Barry Sternlicht has predicted that the United States could face bank failures on a weekly basis, in part due to the impact of high interest rates on commercial real estate lending.
But Fed officials appear prepared to keep interest rates higher for longer as the central bank looks for more evidence that inflation is falling toward its 2% target.
Over the past three months, prices have risen more than expected. The inflation rate in March was 3.5%.
Zandi predicted that the Fed may wait another two to three months before taking steps to ease monetary policy because the Fed is waiting for inflation data to cool down.
The market is focusing on April inflation data due out next week. But hopes for a radical interest rate cut this year have been dashed.
Investors now expect just one or two rate cuts by the end of 2024, according to CME Group\’s FedWatch tool, up from six forecasts at the start of the year.

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