How the Fed could 'take their foot off the break': Strategist

The Bureau of Economic Analysis released its January Personal Consumption Expenditures (PCE) Index reading on Thursday morning, falling in line with Wall Street expectations. As a result, US stocks (^GSPC, ^DJI, ^IXIC) have opened higher in morning trading. Many eyes are on the Federal Reserve, speculating how it will form its next policy decision.

NatWest Markets Securities CEO Michelle Girard joins Yahoo Finance to discuss the PCE reading and the Fed's decision-making as inflation moves toward a 2% target.

Girard elaborates on what to expect from the Fed's Thursday commentary: "Since the start of the year when the market was initially very optimistic about aggressive rate cuts, we've seen the Fed pushing back. And with the data coming, as you said, on the inflation front more bumpy than the Fed would like to see, that message has been consistent from the Fed –– that yes, the peak in rates may be in, but the timing of when they can cut is something that they want to be patient about, given the fact that they want to have confidence inflation is, in fact, going to get down to 2%. "

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

BRAD SMITH: Just first and foremost here, I mean, we're going to get a lot of Fed speak as we move on throughout the rest of today's trading session as well. How do you think a print like this shifts what we may hear in some of those planned remarks?

MICHELLE GIRARD: Well, I think what we'll probably continue to hear from Fed officials is that they want to be patient. They want to have more confidence that inflation is sustainably moving toward that 2% target before they cut interest rates. Since the start of the year when the market was initially very optimistic about aggressive rate cuts, we've seen the Fed kind of pushing back.

And with the data coming in, as you said, on the inflation front more bumpy than the Fed would like to see, that message has been consistent from the Fed that yes, the peak in rates may be in. But the timing of when they can cut is something that they want to be patient about, given the fact they want to have confidence inflation is in fact going to get down to 2%.

SEANA SMITH: Michelle, do you think that patient approach, does that make sense? Then at this point, it sounds like that maybe is the case. And then when we talk about getting eventually back to that 2% target, what do you think that is going to potentially look like?