Spartan Capital Economist Predicts Potential Fed Rate Cuts Based On Employment Data

According to Odaily, Spartan Capital Securities Chief Market Economist Peter Cardillo commented on the latest PCE report, highlighting positive indicators that suggest inflation has peaked and continues to decline. He noted that while personal income growth is not robust, consumer spending remains strong, indicating a minimal likelihood of a recession in the first half of 2025. Cardillo emphasized that the Federal Reserve is expected to cut interest rates, though the extent of the cuts—whether 25 or 50 basis points—remains uncertain and will depend on next week's employment data. Cardillo explained that if the employment data is significantly weaker than expected, with job growth below 100,000, the probability of a 50 basis point rate cut increases, especially given the favorable inflation trends. He projected that the Federal Reserve might implement three rate cuts, with a potential 0.5 percentage point reduction in September, contingent on the employment figures. Otherwise, a 25 basis point cut in September followed by a 50 basis point cut in December is anticipated.