According to Yahoo News, Apollo Asset Management's co-president, James Zelter, believes that the Federal Reserve has a 'loaded gun' to use if the current Goldilocks economy worsens. The central bank has maintained high rates, providing policymakers with the flexibility to lower them if needed. Zelter stated that the 'Fed put' is back in the market, referring to the belief that the central bank will intervene to prevent a significant decline in the markets or the economy beyond a certain level.
The Fed has kept rates fairly high, currently standing at 5.25%-5.5% — the highest since 2001. Zelter noted that if there were any challenging economic conditions, the Fed has the ability to use its 'loaded gun' as needed and appropriate, although he doesn't think it will be necessary. The central bank has mostly tamed high inflation following a series of rate hikes that began in March last year, while unemployment numbers remain close to historic lows and GDP growth remains strong.
However, some experts, such as Mohamed El-Erian, warn that the markets and the economy face headwinds, as Goldilocks data won't last for long, Treasury yields are likely to rise, and oil prices may increase.
