Bloomberg: Pimco’s Clarida Says Fed Could ‘Ratchet Down Rates’ Next Year

Richard Clarida, global economic advisor at Pacific Investment Management Co. (Pimco) and former Federal Reserve vice chairman, says the Fed could “ratchet down rates” in 2024 despite not meeting its inflation target. “We could see cuts next year, even if inflation remains somewhat above 2%,” he says on “Bloomberg Markets.”
——–
Follow Bloomberg for business news & analysis, up-to-the-minute market data, features, profiles and more: http://www.bloomberg.com
Connect with us on…
Twitter: https://twitter.com/business
Facebook: https://www.facebook.com/bloombergbusiness
Instagram: https://www.instagram.com/bloombergbusiness/

Transcript

Looking through the headlines of what we heard from pal this morning this caught my eye sort of on this topic is that palsy’s U.S getting two percent core inflation by 2025 and to your point that if you look at the Dot Plot you actually see some Cuts penciled in next year is

There a situation where okay we’re not at two percent yet but the FED sees something and is willing to cut even though we’re not back to Target oh yes in fact that’s that’s really our Baseline view uh at Pemco it’s what we sometimes call the two point something

Uh uh destination that is we could see them uh under their under their Outlook we could see inflation next year falling below three uh that’s obviously is not two uh but in that context inflation will have fallen substantially and we do think the FED will can ratch you down

And would ratchet down rates uh in those uh circumstances uh and so so yeah so yes obviously you know the FED will be like the ECB and other central banks uh will be especially data uh dependent but yeah we could see Cuts next year even if inflation remains somewhat above two percent

source