Economists are expressing growing doubts about the potential for the Federal Reserve to cut interest rates this year. A recent shift in sentiment has been observed given the ongoing uncertainty about the impacts of the coronavirus pandemic and inflation. While the Federal Reserve continues to claim that any inflation spikes are transitory, a segment of economists have adopted a skeptical disposition.
One of the key concerns is that a premature cut in the interest rate could stimulate excessive growth, leading to an overheated economy which could in turn inspire another round of steep rate hikes in response. Conversely, delaying a rate cut may potentially stifle the economy’s recovery efforts. There is an apparent consensus that any decision on rates needs to be cautiously thought out in light of the current economic volatility.
