Stocks (^GSPC, ^IXIC, ^DJI) are rebounding ahead of the highly anticipated Federal Open Market Committee (FOMC) meeting, which will determine the Federal Reserve’s decision on possible rate cuts. JP Morgan Asset Management global market strategist Jordan Jackson joins Catalysts to discuss the outlook for rate cuts.
Jackson acknowledges “there is a real risk” that a Federal Reserve rate cut may not materialize at all in 2024. He points to dynamics such as persistently high underlying inflation and a tight labor market , suggesting the Fed is “unable to cut rates.” Additionally, Jackson notes that historically, the Fed cutting rates during an election year has often led to a recession, saying, “At best, they may be able to make a cut in December.”
If no rate cuts occur in 2024, Jackson predicts that markets could instead see three to four rate cuts in 2025. Asked how markets would respond to a sustained higher environment if the rate cuts do not occur. materialize, the strategist responds that “equity markets can handle it”, while emphasizing that profits would become crucial for market performance.
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Editor’s note: This article was written by Angel Smith
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