Important Statements from the Federal Reserve Regarding Interest Rates

Famous investor Cole Smead warned on Monday that the Federal Reserve might not have much room
for maneuver amid ongoing global market sell-offs,
with fears of an imminent recession in the United States.

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The Fed Fights a Phantom

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Smead told CNBC that the Federal Reserve is still trying to combat the effects of fiscal stimulus,
which has made it difficult to accurately gauge the state of the economy.

In this context, San Francisco Federal Reserve President Mary Daly said on Monday that
she expects interest rates to be cut later this year but declined to provide a timeline for
when the central bank would make such a move.

The Fed Fights a Phantom

With markets expecting significant cuts to begin in September, Daly said that progress in inflation and the apparent slowdown in employment are likely to push the Federal Reserve to ease monetary policy to some extent.

During a forum in Hawaii, the Fed official added, “Monetary policy adjustments will be necessary in the coming quarter, and this will depend heavily on incoming data.”

On the other hand, Smead told “Squawk Box Europe”:
“The Federal Reserve is sometimes trying to fight a phantom.
The phantom is a massive amount of federal deficit spending,
which amounts to 7% of the US GDP.”

He said, “I believe Powell is doing his best to understand this problem and address it with monetary policy.
But it is a fiscal problem, and this fiscal problem will not go away.”

These statements come on the same day that Wall Street suffered its worst decline in nearly two years as investors grappled with concerns about slowing growth and the Federal Reserve’s response.
At their meeting last week, Federal Reserve officials hinted that interest rate cuts were coming but provided no details.

In the following two days, successive weak reports on layoffs,
manufacturing, and job creation sparked concerns that the Federal Reserve was moving too slowly.

Important Statements from the Federal Reserve Regarding Interest Rates

Important Statements from the Federal Reserve Regarding Interest Rates

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