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Fed interest rate cuts? JPMorgan warns of dangerous consequences for markets!
JPMorgan warns of negative consequences of a possible Fed interest rate cut for stocks, bonds and the dollar. Analyzes and forecasts.
Fed interest rate cuts? JPMorgan warns of dangerous consequences for markets!
Warns about the upcoming decisions of the Federal Reserve Daily Hodl that possible interest rate cuts this week could have a negative impact on the US financial market. The concerns arise from a recent Bloomberg report that suggests political pressure is playing a role in the Fed's decision-making.
David Kelly, chief global strategist at JPMorgan Asset Management, said a rate cut could "ultimately be negative for stocks, bonds and the dollar." This is because such a decision would reduce demand. Kelly argues that the current economic situation offers little justification for a rate cut because inflation and unemployment, which are only slightly above the Fed's targets, show no significant signs of need.
Risks for the financial markets
Kelly warns that any decision perceived as capitulation to political forces could pose additional risks to U.S. financial markets. With inflation projected to be 1.2 percentage points above the Federal Reserve's target and unemployment 0.3 percentage points above target, he questions why the Fed should consider cutting interest rates.
In an interview with Bloomberg TV, Kelly addressed the issue of tariffs, which he said could exacerbate inflation in the U.S. while slowing economic growth. He characterizes the U.S. economy as “gradually grinding to a halt,” with inflation rising while economic growth slows. This situation makes companies reluctant to hire new employees, making it increasingly difficult for job seekers to find suitable positions.
Overall, Kelly delivers a clear message about the uncertainties of the U.S. financial future and the potential negative consequences of interest rate cuts that are not based on sound economic foundations.