Clarida said his former colleagues need to be on guard against sticky prices that could thwart plans to ease this year.
Former Fed Vice Chair Richard Clarida said policymakers need to be on guard against sticky prices that could thwart plans to ease monetary policy this year.Stubbornly high inflation could push the Federal Reserve into a more cautious stance this year regarding interest rate cuts, the central bank's former vice chair said Friday.
Richard Clarida, who served as Fed governor until January 2022 and is now a global economic advisor at asset management giant Pimco, said his former colleagues need to be on guard against sticky prices that could thwart plans to ease monetary policy this year."This may be more of a hope than a forecast," Clarida said during an interview on CNBC's ".
Markets also are expecting three cuts this year, though that pricing has been scaled back after data to start the year showed inflation higher than expected. Fed officials are banking that elevated shelter inflation is on its way down, paving the way to lower their key borrowing rate from its highest level in more than 23 years. Clarida, however, said the extent to which the Fed can cut is unclear.
"Under a pretty broad range of scenarios, they're going to get at least one cut in this year," he said.The Fed prefers the Commerce Department's measure of personal consumption expenditures prices, with a particular focus on the core reading that excludes food and energy. The headlinefor January was 2.4% and core was at 2.8% — both above the Fed's 2% goal but headed in the right direction.was at 3.2% for headline and 3.8% for core, both well above the central bank target.
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