As the Federal Reserve approaches its next policy meeting, economist George Lagarias from Forvis Mazars is recommending a cautious 25 basis point rate cut.
He argues that a smaller adjustment is preferable to a more substantial 50 basis point reduction, which could be perceived as an excessive reaction to current economic conditions.
Lagarias suggests that a larger rate cut might be misinterpreted as a sign of economic distress, potentially leading to increased uncertainty. He emphasizes that such a move could inadvertently heighten market anxiety and contribute to a negative economic cycle.
While there is growing speculation for a more significant rate cut due to recent data—such as a notable drop in job openings—Lagarias contends that the situation does not warrant such drastic measures. He attributes the slowdown in the job market to supply issues rather than a decline in demand.
This viewpoint aligns with that of other analysts, including Mohit Kumar from Jefferies, who also advises against a dramatic rate cut in the Fed’s upcoming decision.
Federal Reserve meetings usually follow a predictable pattern, but this week’s Federal Open Market Committee (FOMC) gathering was shrouded in uncertainty.
At the Token2049 event on September 18, Arthur Hayes, co-founder of BitMEX, warned that upcoming interest rate cuts by the U.S. Federal Reserve could trigger a major downturn in the crypto market.
Cryptocurrency investors are closely watching the Federal Reserve’s interest rate decision set for tomorrow.
BlackRock Investment Institute is skeptical about the Federal Reserve implementing as many rate cuts as the bond market anticipates.