The Fed may do a policy U-turn and slash interest rates as soon as year-end, because a recession almost here, per JPMorgan

9/18/2023

The Fed may do a policy U-turn and slash interest rates as soon as year-end, because a recession almost here, J.P. Morgan, $JPM, Asset Management's CIO has said.

WSJ said: Central bank is likely to pause rate increases in September, then take a harder look at whether more are needed

Fed officials raised rates at 11 of their past 12 meetings, most recently in July, to a range between 5.25% and 5.5%, a 22-year high.

Other economists outside the Fed say spending and growth data can overstate the economy’s strength ahead of a slowdown. “This is how policy accidents always occur: a fixation on backward-looking data,” said Daleep Singh, chief global economist at PGIM Fixed Income.

“Most of the forward-looking indicators now suggest that while restrictive policy may still be appropriate,” the degree of restraint being delivered by high real rates might soon be “more than this economy can handle,” he said.