Fed Holds Off on Interest Rate Changes Despite Slower GDP Growth and Rising Inflation Concerns

In the first quarter of 2024, the United States GDP (gross domestic profit) only grew by 1.6%, marking the smallest increase in over two years. Despite this, the Federal Reserve has decided to hold off on making any changes to interest rates as they continue to monitor inflation data, which has proven difficult to predict.

Jason Furman, a Professor at Harvard University’s Kennedy School of Government, recently spoke with Yahoo Finance about his perspective on the economy and the potential for rate cuts by the Federal Reserve. Furman pointed out that core PCE inflation, which is closely monitored by the Fed, rose to a 3.7% annual rate in the first quarter, far exceeding previous expectations of 2.1%. This unexpected jump has raised concerns about inflation, making it unlikely that the Fed will enact rate cuts anytime soon unless there is a significant decline in the job market.

Furman emphasized that a drastic deterioration in the job market would be the only scenario in which the Fed might consider cutting rates before the end of the year. To stay informed on expert analysis and