Fed Officials Can Be More Cautious With Rate Cuts, Cook Says

At the start of 2024, the Fed funds rate was at its highest in over two decades, exerting significant restraint. Throughout 2023, inflation gradually aligned with objectives, while the labor market cooled. Since September, the FONC voted to reduce the Fed funds rate by 100 basis points, easing monetary policy. The labor market showed resilience, and inflation remained stickier than expected. The policy rate is expected to move towards a neutral stance, with a cautious approach to further cuts.

What was the state of the Fed funds rate at the beginning of 2024?

• It was at its lowest level in two decades.

• It was reduced significantly.

• It was at its highest level in more than two decades.

• It remained unchanged from the previous year.

What action did the FONC take regarding the Fed funds rate since September?

• Increased it by half a point.

• Eliminated it completely.

• Reduced it by half a point and then by two quarter points.

• Maintained it at the same level.

What is the Federal Reserve's dual mandate?

• Price stability and maximum employment.

• Economic growth and low inflation.

• High employment and low interest rates.

• Financial stability and economic expansion.

How did the labor market and inflation behave since September?

• The labor market collapsed and inflation skyrocketed.

• The labor market weakened and inflation decreased.

• The labor market strengthened and inflation was more persistent.

• Both the labor market and inflation remained stable.

What approach does the speaker suggest for future rate cuts?

• Proceed cautiously with further cuts.

• Increase rates instead of cutting them.

• Maintain the current rate indefinitely.

• Proceed aggressively with large cuts.