Coming out of their January FOMC meeting, Federal Reserve officials have decided to hold interest rates steady where they are, forgoing rate cuts widely anticipated by investors and markets.

Robert Kaplan, former CEO and President of the Federal Reserve Bank of Dallas, weighs in on the Fed's decision and its expected timeline to enact rate cuts in early 2024, likening the governing central bank to an oil tanker that "takes a little bit of time to change direction."

Speaking with Yahoo Finance, Kaplan also comments on select roadblocks obstructing the Fed's 2% inflation rate target as geopolitical headwinds pick up speed.

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 Luke Carberry Mogan.

Video Transcript

- Now, here to continue the conversation around the Fed's path for monetary policy. We have Robert Kaplan, former president and CEO of the Federal Reserve Bank of Dallas. Robert, it is good to see you. Maybe we'll just start here, Robert, your reaction to this statement. Would you make of it?

ROBERT KAPLAN: They want to leave their options open. I think they want to make sure that the market doesn't believe too strongly that they're going to cut in March. And I think they're setting the stage for making a decision in either March or May, that they will do their first cut. But they're giving themselves more time to see a couple of more inflation reports and make sure inflation progress is sustained.

- Robert, I have to ask since we have you here. Do you miss it? How hard is it in that room coming to a consensus, not just on the decision, but kind of the discussion around it? You know, what do you think people maybe don't understand about this whole process?

ROBERT KAPLAN: The Fed is a little bit like a supertanker, meaning you don't-- unless it's crisis, you deliberate, you try to telegraph the way you're thinking about things, and then you act. And so, for the Fed to stop raising rates, that's a little bit like moving a supertanker. To start cutting rates, it wants to be confident. And I would want to be confident that inflation progress that's been hard earned has been sustained. But once it starts cutting, it may wind up cutting more than people think. But changing direction, you think of a supertanker, it takes a little bit of time to change direction.

- And Robert, sticking with inflation here, the Fed wants to obviously, get back to that 2% target, and then importantly, right, stay there. We've had some economists come on the show, Robert, who say, you know that actually might be tougher. Then some are estimating. What do you think?