Inflation and uncertainty on oil shock means Fed should wait and see, says PIMCO's Richard Clarida

• Clarida agrees with the Fed's 'wait and see' stance due to inflation moving in the wrong direction and geopolitical uncertainty impacting oil prices.
• He highlights that many oil shocks are mean-reverting, but the current Middle East hostilities add more uncertainty, making patience sensible.
• Clarida notes that a segment of the FOMC (around seven members) believes the policy rate is near its peak and anticipates rate cuts eventually, but not in a rush this year.
• He expresses caution regarding private credit's rapid growth and lack of stress testing in a downturn, but indicates large bank exposure appears modest based on available public information.

Richard Clarida, former Fed Vice Chair, supports the Federal Reserve's 'wait and see' approach to monetary policy, citing persistent inflation and uncertainty from oil shocks. He notes that while some FOMC members anticipate eventual rate cuts, there's no rush this year. Clarida also discusses private credit, emphasizing the need for granular analysis, though current bank exposure appears modest.