“The Fed would like to see either a substantial fall in inflation, but also, the problem is the labour market is hot,” Rajan, who is a well-known commentator on the global economy, said Wednesday. “The Fed may think if rates are not doing damage, why worry.”
The US Federal Reserve will probably want to see inflation come down further before easing policy and any expectations of interest rate cuts by March are “overly optimistic,” India’s former central bank Governor Raghuram Rajan said.
While inflation in the US is slowing, it’s not easing at a fast enough pace that would give the Fed comfort to shift policy, Rajan, who is now a professor of finance at the University of Chicago Booth School of Business, told Menaka Doshi at a Bloomberg India Edition newsletter event in Mumbai.
