The Federal Reserve cut interest rates by 25 basis points at its November policy meeting on Thursday. Strategists view the decision as a response to disinflationary trends, cautioning that inflation risks still loom. EY chief economist Gregory Daco, John Hancock Investment Management co-chief investment strategist Emily Roland, and Federated Hermes senior portfolio manager RJ Gallo join Yahoo Finance to break down the Fed’s hawkish stance, rising bond yields (^TYX, ^TNX, ^FVX), and the central bank’s inflation outlook coming off of the 2024 election results. “We’re still in an environment where consumers are being price sensitive, where businesses have less pricing power, and where you’re seeing strong productivity growth,” Daco tells Julie Hyman and Josh Lipton. “These are disinflationary dynamics that will continue to play out.” Roland explains that Fed officials are being extra careful to remind investors that “they are seeing some cracks in the economy, they’re seeing cracks in the labor market. Inflation is coming down. And that does warrant some cuts. And maybe we see a little bit of relief here in terms of that backup in bond yields.” Gallo finds the US economy continuing to remain resilient, affirming that “it’s not fading that much.”
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