Ed Yardeni Says Further Rate Cuts Will Increase The Chances Of Financial Instability: Report

Yardeni’s comments come a day after the Fed cut the policy rate by 25 basis points, as was expected.

Economist Ed Yardeni, president of Yardeni Research, has reportedly cautioned against further interest rate cuts, saying that the U.S. economy is on a relatively firm footing.

“I don’t really think the economy needs rate cuts. I think if the Fed keeps lowering interest rates, then I think they will be feeding animal spirits. In other words, I think they will increase the chances of financial instability,” Yardeni said in an interview with CNBC.

He touched upon the weakness in the labor market, stating that it might seem to need rate cuts. However, Yardeni added that what ails the labor market can be cured with lower interest rates. “Things like deportation, stricter immigration, AI, all these issues are structural in nature,” he added.

Yardeni’s comments come a day after the Fed cut the policy rate by 25 basis points, as expected. This brings down the federal funds rate to the 3.75% to 4% range.

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