At Extreme Investor Network, we are constantly monitoring the latest trends and insights in the world of finance to provide our readers with valuable and unique information. Today, we want to dive into the discussion surrounding Federal Reserve Chairman Jerome Powell and the potential impact of a no rate cut scenario on the stock market.
According to Apollo chief economist Torsten Slok, a scenario in which the Federal Reserve does not cut interest rates risks fueling a hard landing in 2025. Slok believes that if rates remain unchanged, stocks will slowly lose momentum, leading to massive losses in a higher rate environment. He has pointed to runaway inflation and the strong economy as reasons why the Fed may not cut rates.
Slok’s cautionary words serve as a reminder that the stock market’s current “sugar high” may not last if the Fed adopts a more hawkish policy. As highly leveraged consumer and corporate balance sheets come under pressure, the negative consequences of high rates could begin to dominate. This could ultimately lead to a hotter landing in 2025, reminiscent of the market conditions seen in 2022 when stocks fell against rising rates.
Despite the risks posed by high rates, Slok does not see a strong chance of a Fed rate cut and suggests that monetary policy may remain unchanged this year. With the US economy showing surprising strength and inflation figures on the rise, Slok believes that the Fed may opt to keep rates high for a longer period to achieve their goal of slowing down the economy.
Investors are now questioning the likelihood of a rate cut in June, with markets pricing in odds for September and even the possibility of rate hikes to combat inflation. However, Slok disagrees with this outlook, emphasizing the importance of maintaining higher rates to achieve the Fed’s objectives.
At Extreme Investor Network, we strive to provide our readers with in-depth analysis and unique perspectives on the latest financial trends. Stay informed and stay ahead of the curve with our expert insights and analysis.
