CEO of Franklin Templeton disregards 0.5% rate reduction, claiming a strong economy, prior to FOMC meeting.
In the lead-up to the Federal Open Market Committee (FOMC) meeting, experts are divided on whether the Fed should make a 25 basis points (bps) or 50 bps rate cut. Franklin Templeton CEO Jenny Johnson expects a 25 bps cut during today's stock market meeting, while Jerome Powell, chair of the Federal Reserve, has indicated a likelihood of multiple rate cuts by the end of 2025, including potential cuts in October and December.
Jerome Powell's speech on future guidance on the Fed's stance has yet to be priced in by the stock market. Scott Melker, a market expert, predicts a "hawkish" 25 bps Fed rate cut, anticipating that Powell's speech will focus on data dependency and lack of commitment to further cuts. Crypto analyst Kevin Capital suggests that the stock market has already priced in the rate cut ahead of the FOMC.
The weakening labor market is a concern, with Johnson acknowledging its existence but noting that the jobs data is backward-looking. She asserts that wage growth, retail sales, and inflation at 3% suggest a robust labor market. However, she argues that the data shows a robust economy, but notes that there can't be an argument for no Fed rate cut due to Powell's previous statements.
The Bitcoin price is currently trading sideways ahead of the rate cut decision, with Ethereum and other altcoins also trading flat as the market awaits Powell's speech on future guidance on the Fed's stance. U.S. President Donald Trump has urged Powell to make a larger rate cut than planned for the meeting.
If she were Jerome Powell, Johnson would opt for a 25 bps rate cut. She believes the Fed still has opportunities to make further cuts in October and December if necessary. The stock market's potential rally could depend on Powell's indication of openness to further rate cuts by year-end.
As the FOMC meeting approaches, the question remains: Will the Fed make a 25 bps or 50 bps rate cut, and how will this decision impact the stock market? Only time will tell as we await Powell's speech and the FOMC's decision.
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