How Much Will the Fed Cut Interest Rates This Year?

Kathryn Rooney Vera, Chief Market Strategist at StoneX, appeared on CNBC's Squawk Box to share her views on the Fed's policy outlook. Despite ongoing concerns about inflation and economic growth, Vera believes the Fed could cut interest rates twice this year, but not until the second half of the year. Vera said, "The stock market closed today to observe former President Carter's funeral, but investors are awaiting the job report for tomorrow," while expressing cautious optimism about the US economy while acknowledging the pressure of inflation and financial challenges. When asked about inflation, Vera said that continuous economic growth beyond potential could further increase inflation. 'If the State Productivity Office fails to cut spending, then I will be more concerned about inflation,' Vera said, urging the market to be cautious. The US economy, growing at 1.8% last year compared to expected potential, is expected to maintain a similar growth momentum until 2025. However, Vera warns that this growth could be inflationary, especially if significant fiscal tightening is not implemented. Vera believes that the Fed may find it difficult to implement further policy changes in the near future. He said, "The Fed is pausing and may do so in the near future." However, he warned that inflation exceeding 3.5% could prompt the central bank to reconsider its neutral stance. Vera said the important thing is to prepare for alternative scenarios, although he predicted there would be two interest rate cuts in 2025. He said: "What I tell my clients is to protect themselves from the risk of the Fed not cutting interest rates", while also pointing out that stronger-than-expected economic growth could delay policy easing. Vera also mentions the global investment trend, noting that global private investment is approaching record levels, which she describes as a positive signal for economic growth. However, she states that structurally high inflation may continue to be a medium-term issue. DYOR! #Write2Earn #Write&Earn $BTC {spot}(BTCUSDT)