Amid heated discussions about the direction of the Federal Reserve’s (FED) monetary policy decisions, JPMorgan’s chief U.S. economist Michael Feroli offered crucial insights during a recent interview on CNBC’s ‘Squawk on the Street.’ . Feroli commented on the possibility of a reduction in interest rates and the economic outlook in light of the latest employment report.
The discussion revolved around the influence of the latest employment report on expectations for a cut in interest rates in the first quarter. Feroli noted that the data may temper expectations of an immediate interest rate cut. Thus, stating that it would take a significant decline in the economy or notable economic turbulence to justify such a measure.
When assessing employment and wage growth in the fourth quarter, Feroli acknowledged that there was a slowdown. However, he emphasized that growth was still relatively robust. He pointed to several indicators that suggest job growth could slow further in the coming months, but also stressed that a scenario of negative numbers may not materialize in January or February.
Employment report influences monetary policy expectations
The divergence of opinions between economists at JPMorgan and Goldman Sachs regarding the right time for a cut in interest rates was highlighted by Feroli. The JPMorgan economist emphasized the importance of maintaining a moderate approach to labor costs before the FED considers lowering interest rates. Also arguing that the central bank should avoid sudden changes in monetary policy.
Feroli made a bold prediction by suggesting that a possible interest rate cut could come as early as June. It was based on the latest economic data. However, he also warned against hasty celebrations regarding controlling inflation. He also cited potential risks arising from international tensions that could affect supply chains and reverse the recent slowdown in goods prices.
Michael Feroli’s views provide valuable insight into the current economic landscape and the FED’s monetary policy outlook. The financial community and investors now await the FED’s next decisions with interest. Thus, economic developments that will shape the future of interest rates in the United States.
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