Many economists have been calling for the Federal Reserve to take action to stimulate the economy, and now JPMorgan’s top economist is joining the chorus, urging the central bank to slash interest rates by half a point this month.
Michael Feroli, JPMorgan’s chief U.S. economist, believes that the Fed should take bold action to address the growing concerns about the economy. In a note to clients, Feroli argued that the Fed should cut interest rates by 50 basis points at its upcoming meeting on July 31, citing slowing economic growth and declining inflation.
Feroli’s call for action comes as the U.S. economy is showing signs of slowing down. The latest GDP numbers revealed that economic growth slowed to 2.1% in the second quarter, down from 3.1% in the first quarter. Additionally, inflation has been trending below the Fed’s 2% target, with the core personal consumption expenditures (PCE) price index rising just 1.6% in June.
The JPMorgan economist believes that the Fed needs to act quickly to prevent the economy from slipping into a recession. He points out that the yield curve has inverted, which is often a sign of a looming recession. Feroli argues that the Fed should take advantage of the current low inflation environment to cut interest rates and stimulate the economy.
Feroli’s call for a half-point rate cut is more aggressive than what many other economists are predicting. Most economists expect the Fed to cut interest rates by 25 basis points at the July meeting, but Feroli believes that a more significant cut is needed to make a meaningful impact on the economy.
The Fed has been under pressure to take action to address the growing concerns about the economy. President Trump has been a vocal critic of the Fed, calling for lower interest rates to boost economic growth. However, Fed officials have been more cautious, citing concerns about inflation and the potential risks of cutting interest rates too quickly.
Despite the disagreements, Feroli’s call for action highlights the growing sense of urgency among economists to address the slowing economy. With the Fed’s next meeting just around the corner, all eyes will be on the central bank to see if it will take bold action to stimulate the economy.
In the long run, JPMorgan’s top economist is urging the Fed to take bold action to address the slowing economy. With inflation below target and economic growth slowing, Feroli believes that a half-point rate cut is needed to prevent a recession. While the Fed may not ultimately follow Feroli’s advice, his call for action highlights the growing concerns about the economy and the need for the central bank to take decisive action.
Source: CNBC
Published: September 5, 2024
