The Federal Reserve announced on Wednesday afternoon that they will hold rates steady. However, central bank officials are still indicating that three rate cuts are likely to materialize in 2024. Morgan Stanley Investment Management's Chief Investment Officer of Broad Markets Fixed Income Michael Kushma joins Yahoo Finance Live to discuss why he believes the Fed is proceeding with caution.
Kushma stated, "They do not have to adjust monetary policy in any significant way this year" in order to achieve inflation targets. He added that this announcement "steadies the markets," and that the Fed is "on track" when it comes to meeting its objectives.
Kushma characterized officials' projections of an uptick in core inflation as a "realistic" move by the Fed. Kushma argues that the first quarter of 2024 has been "quite disappointing," with inflation data not supporting the Fed's goal of bringing inflation down to its 2% target. However, he notes the Fed has "upgraded their growth forecasts across the board" due to the economy being stronger than expected.
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