JPMorgan Asset Administration Chief International Strategist David Kelly mentioned in an interview with CNBC that the slowdown within the US economic system is changing into more and more evident and that the Fed’s anticipated rate of interest cuts won’t change this image.
Kelly argued that the weak August employment report and different financial indicators pointed to additional softening within the economic system, saying, “The economic system shouldn’t be in recession, however it’s slowing. All the info signifies that an economic system that was already struggling is now nearing exhaustion.”
Regardless of market optimism, Kelly argued that rate of interest cuts will not enhance progress, saying, “I noticed the inventory market rise in the present day, which clearly displays the expectation of a charge lower. Nonetheless, this does not resolve the basic drawback. Reducing rates of interest will cut back retirees’ curiosity earnings and sign additional charge cuts to the market. In such a state of affairs, debtors may have no motive to borrow extra.”
Kelly, stating that the expertise of the 2000s additionally proves this, added, “The complete twenty first century has proven us that rate of interest cuts don’t stimulate financial progress. The post-financial disaster cuts had no impact. Do not count on the Fed to avoid wasting the economic system.”
*This isn’t funding recommendation.
