As the Federal Reserve prepares to decide on rate cuts on Wednesday, markets are trading higher on Monday. Gregory Peters, PGIM’s co-head of fixed income investments, joins The Morning Brief to provide insight on the rate cut outlook.
Peters suggests that Wednesday’s Fed meeting may not be “very interesting,” as Chairman Jerome Powell may have to “step back and be more dovish” in light of the hot inflation data that fail to align with the Fed’s objective. This scenario could force the central bank to keep its rates stable and to refrain from rate cuts. Although Peters acknowledges the possibility of higher rates, he notes that “that’s not the base case.”
The “root cause” of the Fed’s rate-cutting apprehension is “a positive story,” Peters says. He points to the robust economy, coupled with slightly higher inflation, as a “favorable backdrop for broader profits”.
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Editor’s note: This article was written by Angel Smith
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