Optimism about September rate cut could backfire: economist
The CME FedWatch tool indicates a near 100% chance of a rate cut in September, with some economists joining the call for a cut as early as July. Steven Ricciuto, Mizuho’s Chief US Economist, appears on Market Domination to discuss the state of the economy and what it suggests for a possible rate cut. Ricciuto believes the latest economic data shows “a still very resilient economy.” He continues, “We’ve been data-driven all this time. We suggested earlier this year that the economy would move from above-trend growth to trend growth. Labor market conditions would ease slightly along with that. But inflation would stagnate at around 3% instead of 2%. And by and large, that remains the case. The economy averaged 2% in the first half of the year, and that’s the trend.” He added, “The current data represents the best time for economic information to determine if interest rates should be lowered. However, the reality is that we have not yet reached the test of when to actually lower interest rates. The market is eager to adjust, which is creating a financial market environment that is further stimulating the economy, and that may well prevent an interest rate cut.” For more expert insights and the latest market trends, click here to watch this entire episode of Market Domination. This article was written by Melanie Leal.