Sam Stovall, Chief Investment Strategist at CFRA Research, appeared on CNBC to share predictions regarding the Federal Reserve's actions in light of the economic situation.
Fed Interest Rate Predictions
Stovall expects the Fed to cut interest rates in September and again in December, skipping October. He believes these measures will provide limited economic stimulus without fuelling inflation.
Market Conditions and Inflation
The economist noted that investors are closely watching Fed Chair Jerome Powell's messages ahead of the Jackson Hole meeting. He emphasized, “If they say they're going to stick to the data, we still see a sticky inflation environment with the risk of a slowdown in employment.” The annual core personal consumption expenditures inflation is projected to remain above 3% throughout the year.
Impact on the Economy
Stovall pointed out that the housing sector remains a critical indicator for the Fed. He reminded that the construction confidence index recently fell to its lowest level since 2022. Given the weak consumer confidence, he argues that the Fed's decisions should be targeted for the next 12-18 months.
Samuel Stovall's predictions highlight the uncertainties of the current economic situation and the need to account for various factors in the Fed's decision-making.
