Fed may already be late to cutting rates again, strategist argues

00:00 Speaker A

Given that you think the economy is doing okay, are you in the camp then that the Fed maybe starts to cut over the summer or do you think they’re going to wait a little longer to make sure that we’re not going to get tariff induced inflation?

00:15 Speaker B

Well, Julie, I hope this doesn’t seem unkind, but um, this Fed has been late at every turning point. And I think that began when they shifted their attention to backward looking data. So if you’re driving your car looking through the rearview mirror, you you could end up in the danger zone. And I think that’s what’s happened. They let inflation get out of control. And then that preemptive hundred basis points cut this last fall, uh is is mind boggling to me, and it was to the bond market because you saw the 10 year rally 100 100 basis points to offset the cuts. So I think what I would say is that um, they will probably be late, they may already be late and continuing to cut, uh and I think they will come around uh in in the fall, not over the summer. Do I think they should cut in the summer? I think the new neutral rate would argue that uh the Fed funds rate is too high, and uh it’s it’s creating other problems. Like if you just think about who benefits and who is hurt from the higher rates, it’s the consumer that’s hurt, it’s small businesses that are hurt. Who’s benefiting? Banks who are shopping at at the Fed’s window. Uh they’re getting pretty hefty payments. And then of course, the government is paying uh significantly more on the debt, which is no one’s fault but their own, but it is a fact.