After starting the year with an expectation of six or seven rate cuts, it would be “an embarrassment” for the Federal Reserve to not cut interest rates at all this year, said Doug Cohen, managing director at Fiduciary Trust International. However, he still suspects they will enact one or two rate cuts, though the looming presidential election complicates the decision.
Despite low employment and a “booming” stock market, American still aren’t pleased with the level of inflation and everyday costs, as shown by sentiment polls, he said. It will likely be a big topic of discussion going into the election. However, all decisions about rate cuts are data-dependent, he noted.
Additionally, “I think there are some longer term concerns about inflation coming out of this incredibly unusual period with the pandemic, where we had so much stimulus thrown at the economy,” Cohen said, “both fiscal stimulus and monetary stimulus, and we had all of the supply chain disruption. We’re still working through the last parts of that.”
He added other concerns, including deglobalization, wages and unions, all of which he believes are going to make inflation “more sticky” than the Federal Reserve would prefer.
