The Federal Reserve is set to announce its first interest rate cut in nearly a year. Fitch Ratings has issued a warning about the state of the economy and the implications of Trump administration policies. Opinions from three major financial institutions will be discussed.
Pre-Rate Decision Predictions
The necessity of reducing interest rates and the journey leading to this stage have been previously explained in detail. For cryptocurrency investors, weakening employment data and limited inflation growth have created a supportive environment. The Fed’s narrative of a soft landing has concluded, and its 2% inflation target may be postponed for several years.
Fitch Ratings Warning
The credit rating agency recently released a report highlighting concerns about government policies potentially causing inefficiencies in the chip sector. Regarding the US acquisition of a 10% stake in Intel, it was noted that this "could generate widespread undesirable inefficiencies." However, significant negative impacts on ratings appear unlikely.
Major Financial Institutions' Analyses
Wells Fargo analysts noted that interest rates have been held steady five times as of July 30. Inflation remains high due to tariff-driven goods inflation and slow service-sector disinflation. Wells Fargo expects the Fed to lower the fund rate to 4.00%-4.25%. Unicredit anticipates a 25bp reduction this month, while Societe Generale suggests an emergency action of 50bp may be necessary.
The Federal Reserve's interest rate cut and Fitch Ratings' warnings highlight current economic risks and implications for financial markets. Perspectives from analysts at major institutions provide insight into the potential outcomes of these changes.
