The renowned economist and businessman explained that it is time to look at the facts and not be confused by erroneous theories.
Paul Romer, Nobel Prize in Economics stated that the Federal Reserve a process should begin interest rate cuts. As he explained, his analysis is due to recently known data on the American economyits acceleration in the last quarter and the slowdown in its level of inflation.
“It would be crazy to raise rates right now”he assured Romer. Furthermore, he added that “they should start cutting rates and explain to people: within a year we will be at our goal of 2%we have to prepare to level out.”
Consumption is the engine that continued to drive the US economy even despite the Fed aggressively raising rates in order to stop inflation. But, at the meeting that will take place next week, it is expected that the entity’s political leaders will decide not to modify it.
“The theory was that Inflation could only be reduced when the economy slowed downand that’s not true now“said the economics professor of Boston College. In that same sense he continued: “We have to look at the facts and not to be confused by a theory which turns out to be wrong.”
Promising data on the US economy
Last Thursday, the United States government published estimates that showed that its gross domestic product grew to a 4.9% annualized rate in the third quarter, more than double the growth of the previous quarter.
In addition, data were known about inflation of the same period that they indicated that touched their lowest level since 2020. In September, the private consumption deflator PCE in USA experienced a slight setback, decreasing to 3.4% in interannual termscompared to the 3.5% that had been registered in August.
The Underlying inflationthat excludes volatile elements as food and energy, also experienced a decrease, standing at 3.7%, one tenth below its level in the previous month. Both movements were aligned with the expectations of the economic consensus.
Source: Ambito
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