Thanks to several interest rate hikes, the Federal Reserve has been able to curb inflation and bring it closer to its 2% goal. However, as economic uncertainty remains, the debate over what the Fed do in the coming months rages on. Claudia Sahm, Sahm Consulting Founder and Lee Munson, Portfolio Wealth Advisors President & CIO join Yahoo Finance to discuss the Fed's performance so far and weigh in on the central bank's policy decisions going forward into 2024.

Sahm argues the Federal Reserve should cut rates sooner than later as deflation has already begun, asking them to "get out of the way and look at the data." Munson adds on to that sentiment, commenting on Fed Chair Jerome Powell stating: "This is not about economic statistics. This is about a very wealthy man named Jay Powell, and he's thinking about what his legacy is and what's going to be on his tombstone."

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Video Transcript

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BRAD SMITH: In November, we saw inflation come down to 3.1% year over year, but something that's keeping inflation high is rents, that rose 6.9% and still some investors remain optimistic that the Fed might stick the soft landing, but getting inflation down to 2% has proven to be more difficult than expected.

Our next guest both say inflation is going down, and that is the key to the soft landing, but the Fed might be its biggest own enemy. Now, we have Claudia Sahm, who is the Sahm consulting founder, and Lee Munson, who is the Portfolio Wealth Advisors president and CIO here. Great to have you both here with us on this holiday, abbreviated trading week, at least, however, the economy continues to tick on here of course every day.

Claudia, I want to begin with you. When you think about the Fed getting down to that 2% personal or set target that they've put out there, what is the key element, especially within their own data dependency that is actually going to get them there?

CLAUDIA SAHM: The Fed needs to wake up. They have beaten us over the head that they are data-driven and they are, but come on, inflation has come down from a peak of 9% to 3%. That is a massive disinflation. I understand they want to see conviction, but what are you looking at? I mean, this is really moving.

And, you know, so I understand. I understand the psychology of the Fed. There was absolutely a case for them to cut in December. I don't expect them to cut until May. And I'm not-- I don't really think it matters frankly, for the soft landing, but it's time for them to get out of the way and look at the data.