It takes a brave person to stand up against authority, and MBMG co-founder and managing partner Paul Gambles has the heart of a lion for calling out the US Federal Reserve, asking it to start cutting interest rates next year if the country is to avoid a recession. Gambles pointedly remarked that the central bank’s policymakers seem to be out of touch with reality as its current policies are far removed from actual factors presently affecting the national and global economies.
Indeed, running between 5.25% and 5.50%, policy rates in the United States currently stand at their highest in over two decades. As a result, Gambles believes that it will take at least five rate cuts on the part of the Fed to prevent an extremely prolonged cycle of monetary tightening throughout next year.
Not So Fast
However, Fed chair Jerome Powell has cast a damper on economists’ hopes for a slew of rate cuts in 2024. As of Friday, December 1st, Powell remarked that it is premature to declare a victory over inflation, let alone speculate on when his agency could be expected to ease up on its policies.
Indeed, despite recent economic data regarding a decrease in price pressures, Powell adamantly declared that the Fed expects to retain its policies restrictive until such time that they are assured that inflation is drifting back down to the wanted 2% target.
Will We Ever Get Back to 2%?
But that 2% target is seen as unrealistic by another financial expert. In his opinion, veteran investments professional David Roche expressed doubts that the Fed will ever bring inflation down to its target.
Instead, Roche believes that the lowest inflation can get in today’s scene is 3%. He cited how many asset prices reflect the possibility of inflation going that low, and the way that central banks aren’t as aggressive about policy as they used to be.
But all this speculation will remain up in the air for now – at least until December 13 when the Fed convenes for its last meeting for 2023.