The market is still optimistic about the Federal Reserve cutting rate this year, possibly as many as six times, but with March quickly approaching, many are not so sure it will happen so quickly.

Yahoo Finance’s Julie Hyman and Brian Sozzi sit down with executives and economists at the World Economic Forum in Davos, Switzerland, while Madison Mills and Josh Lipton weigh in from the Yahoo Finance New York studio.

Some executives are in the early-March, six-rate-cut camp, namely Anne Walsh of Guggenheim Partners Investment Management. Walsh sees the early March deadline as the outcome, but admits this is “more aggressive now that a lot of the market peers are leaving.”

Kenneth Rogoff, former IMF Chief Economist, suggests the uncertainty surrounding factors for a rate cut remain unclear—even to the Fed. “I think the Fed just doesn’t know what it’s looking for.”

“Ultimately the driver of rate cuts, in my view, is what happens to inflation,” states Jan Hatzius, Goldman Sachs Chief Economist, who suggests this is what will determine the pace and amount of rate cuts.

It's all part of Yahoo Finance's exclusive coverage from the World Economic Forum, where our team is speaking to top decision-makers as well as preeminent leaders in business, finance, and politics about the world’s most pressing issues and priorities for the coming year.

Watch this full episode of Yahoo Finance Live here.

Editor's note: This article was written by Eyek Ntekim

Video Transcript

MADISON MILLS: Despite calls from-- for caution from policymakers, US investors still betting on six rate cuts in 2024. But are business leaders just as optimistic? Yahoo Finance's executive editor Brian Sozzi and our own Julie Hyman spoke with folks on the ground in Davos, Switzerland, at the World Economic Forum on their rate expectations in the year ahead. Here's what they had to say.

BRIAN MOYNIHAN: Our team has four cuts next year and four cuts in '25. And so that gets you down in the 3, 3 and quarter, 3%-3.5% range. So that will feel quick. But it's less the pace. It's where it stops out.

ROBIN VINCE: Now it's our house view that we will see rate cuts this year, maybe a little less than what the market's expecting right now and maybe a little later as well. But we'll have to see.

BRIAN SOZZI: Are you in the camp of six rate cuts this year?

ANNE WALSH: Yes, we are. And we're in the camp that they begin in March, which is more aggressive now than it seems like a lot of the market peers are believing.

KENNETH ROGOFF: I think we have a soft landing, maybe we'll get three cuts, something like that. I think the Fed just doesn't know what it's looking for.

JAN HATZIUS: Ultimately, the driver of rate cuts, in my view, is what happens to inflation. And the disinflationary trend cutting through the monthly ups and downs, that's still very much intact.

MADISON MILLS: It's very much intact, but those ups and downs that he mentioned are what's driving the markets, at least from my perspective. Josh, I want to look at the VIX, because while I was at the Stock Exchange this morning, the VIX are passing 15 for the first time since November, hitting 16 at one point.

And this is the fear gauge on Wall Street, right? So this tells us that there's a little bit of that concern potentially coming in, questions about what the Fed is going to do next. Also, today, the Atlanta Fed's index of business inflation expectations, that survey coming out, showing that businesses expecting inflation to decrease significantly over the coming year to 2.2% on average.

After that, we saw the two-year yield hitting just over 4.3% and then record highs for the dollar as well. And I point that out because that doesn't make sense. If we're seeing disinflation, if we're hearing the 2% number that the Fed wants to hear, then we shouldn't be seeing investors flock to safety in the dollar and in bonds. So it just paints to this broader picture of confusion. That's probably what is leading to a little bit of that movement in volatility in the options market

JOSH LIPTON: Yeah. I thought Jan Hatzius over at Goldman-- and congrats to Julie Hyman and Brian Sozzi for bringing us so many heavy hitters from Davos. But Jan Hatzius basically saying, listen, it just-- he's basing it based on where he thinks the trajectory of inflation, what does that look like in. 2024 and you've heard any number of our central bankers come out and say, listen, they like the trajectory, they like where it's going, it is moving in the right direction. But it's still got to get back to that Fed's 2% target.

And importantly, the sustainability there. That's the key word. Not just getting it back to target, but then maintaining it. And how tough is that last leg going to be-- a big question, especially as you see, you know, geopolitics at the Red Sea, any kind of upside risks that can cause to inflation. You have to imagine that's what is keeping Jay Powell up at night is that risk of inflation rebounding in 2024.

MADISON MILLS: And the data as he likes to say, right? We got to wait for the data. We heard Waller reiterating that. So we await the data as well, Josh.