Ed Yardeni expects no interest rate cuts from US Fed this calendar year
The President of Yardeni Research sees policy continuity driving growth in India, particularly in infrastructure.
The US Federal Reserve is unlikely to cut interest rates this calendar year, according to Ed Yardeni, President of Yardeni Research.
“If they (Fed) go ahead and lower interest rates without being necessary, they could get a melt-up in the stock market, which would create other problems, as we saw in the late 1990s,” Yardeni said in a chat with CNBC-TV18.
The year began with predictions of 6-7 rate cuts, which moderated to about three cuts, and finally to just one now, Yardeni pointed out.
Given the recent labour market data, he thinks there could be at most 1-2 cuts over the next 12 months, but none is likely between now and the end of the year.
Also Read: These three factors will decide if the US Fed will cut rates in September: ING
The US Labor Department's employment report, released on June 7, showed that the unemployment rate rose to 4.0% in May from 3.9% in April, ending a 27-month streak of being below this level.
Despite recent signs of labor market softening, it remains relatively strong.
With the economy performing well, and inflation easing, the Fed has the flexibility to hold off on reducing borrowing costs.
Also Read: US employers added a robust 272,000 jobs in May in a sign of sustained economic health
In India, while the election results were unexpected, Yardeni sees policy continuity driving the country forward, particularly in infrastructure development.
India will leverage the opportunity presented as countries seek alternatives to China for a more politically stable environment, he noted.
For more details, watch the accompanying video
Catch all the latest updates from the stock market here
“If they (Fed) go ahead and lower interest rates without being necessary, they could get a melt-up in the stock market, which would create other problems, as we saw in the late 1990s,” Yardeni said in a chat with CNBC-TV18.
The year began with predictions of 6-7 rate cuts, which moderated to about three cuts, and finally to just one now, Yardeni pointed out.
Given the recent labour market data, he thinks there could be at most 1-2 cuts over the next 12 months, but none is likely between now and the end of the year.
Also Read: These three factors will decide if the US Fed will cut rates in September: ING
The US Labor Department's employment report, released on June 7, showed that the unemployment rate rose to 4.0% in May from 3.9% in April, ending a 27-month streak of being below this level.
Despite recent signs of labor market softening, it remains relatively strong.
With the economy performing well, and inflation easing, the Fed has the flexibility to hold off on reducing borrowing costs.
Also Read: US employers added a robust 272,000 jobs in May in a sign of sustained economic health
In India, while the election results were unexpected, Yardeni sees policy continuity driving the country forward, particularly in infrastructure development.
India will leverage the opportunity presented as countries seek alternatives to China for a more politically stable environment, he noted.
For more details, watch the accompanying video
Catch all the latest updates from the stock market here
(Edited by : Shweta Mungre)
First Published: Jun 10, 2024 11:05 AM IST
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