By George Prior
The US Federal Reserve will “lose the confidence of the public and financial markets” and have “disastrous” economic effects, if it continues raising rates any further, warns the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.
The stark warning from deVere Group’s Nigel Green comes ahead of the Personal Consumption Expenditures index, which comes out Thursday at 8:30 am EST.
The PCE price index measures changes in the prices paid by consumers for goods and services over time. It’s one of the key indicators used by the US central bank and other economic analysts to assess inflation trends and make monetary policy decisions.
The deVere CEO comments: “The PCE is being keenly watched as investors were cheered earlier in the week by the weaker-than-expected payrolls data and annual gross domestic product growth forecast – both of which strongly make the case that the Federal Reserve must now stop its most aggressive tightening campaign in decades.”
He continues: “The Fed’s battles against inflation, growth and jobs are being won.
Free Reports:
Sign Up for Our Stock Market Newsletter – Get updated on News, Charts & Rankings of Public Companies when you join our Stocks Newsletter
Get our Weekly Commitment of Traders Reports - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.
“There are now genuine concerns that unless the Fed drops raising rates, it will drive the US economy into a major recession.
“As the world’s largest and most influential economy, this would potentially have disastrous global implications.”
Nigel Green also stresses that not only must the Federal Reserve abandon its tightening program because the program has been effective, but it must also do so because inflation is likely to fall quicker than many anticipate for three reasons.
“First, there’s unlikely to be a wage price spiral as real wages are typically going down despite the increases. Employers now seem to be holding back from increasing salaries on demand, which will help stifle wage inflation.
“Second, the time lag for monetary policies is incredibly lengthy. It takes around 18 months for the full effect of rate hikes to make their way into the economy – and that’s where we are – and so financial conditions will get squeezed even harder in the near term.
“And third, although many economies are now likely to avoid a full-blown recession, economic growth is still expected to be weak for the foreseeable future.”
He concludes: “If the Fed does not stop its rate hiking agenda, it will lose the confidence of the public and financial markets which would have serious, far-reaching negative consequences for the US and the world.”
About:
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of offices across the world, over 80,000 clients and $12bn under advisement.
- COT Metals Charts: Speculator bets led by Platinum & Silver May 18, 2024
- COT Bonds Charts: Speculator bets led by the 10-Year & 2-Year Bonds May 18, 2024
- COT Stock Market Charts: Speculator bets led by DowJones-Mini & Russell-Mini May 18, 2024
- COT Soft Commodities Charts: Speculator bets led higher by Corn & Wheat May 18, 2024
- Stoxx Europe 600: What Signs of Investor Exuberance Keep Telling Us May 17, 2024
- Natural gas prices rose to a 4-month high. China released mixed data May 17, 2024
- S&P 500 index hits record high amidst lower inflation May 17, 2024
- Stock indices have hit all-time highs. The Australian labor market is starting to cool down May 16, 2024
- Target Thursdays: USDInd, Soybean & EU50 hit targets! May 16, 2024
- JPY has sharply strengthened May 16, 2024