Economist Recommends Cautious 25 Basis Point Rate Cut for Fed

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.

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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.

Alexander Stefanov