Former FDIC Chair Sheila Bair believes the Federal Reserve sparked irrational optimism in the markets by signaling possible interest rate cuts in 2024. The Fed held rates steady but projected at least three 0.25 percentage point rate cuts in 2023. This dovish outlook led stocks to rally to new highs, with the Dow posting its longest weekly winning streak in years. Bair sees downside risk if the Fed delivers on more aggressive rate cuts than warranted by economic conditions. Her main concern is the implication of significantly lower rates in 2024.