’A perfect cocktail sauce for a rally in equities’: What market pros are saying after Fed green lights September rate cut

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Powell offers explicit endorsement of imminent policy easing

’A perfect cocktail sauce for a rally in equities’: What market pros are saying after Fed green lights September rate cut“the time has come” for the U.S. central bank to cut interest rates as rising risks to the job market left no room for further weakness and inflation was in reach of the Fed’s 2% target, offering an explicit endorsement of an imminent policy easing.

“He wants to let the markets know that the Fed is not behind the curve. By being as clear about the likelihood of a rate cut in September, he’s actually cutting rates a month early.” “While a September rate cut is essentially a done deal at this point, the more important question is whether this will be a one and done rate cut, or if it will be the beginning of a more substantial cutting cycle, and that will be determined by the economic data over the next two to three months. The market is pricing in multiple rate cuts over the next 12 months, although we remind investors that the market has a history of being too optimistic about rate cuts.

“Today you hear the Fed chair leading off with statements like not seeking or welcoming further cooling in labor market conditions.” “What he’s suggesting here is if the labor market continues to weaken, we’re looking at a 50-basis-point rate cut in September as opposed to 25.”

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