6 Wall Street experts share why investors could be overestimating how much the Fed will cut rates after August's inflation report

Introduction

The Federal Reserve is widely expected to raise interest rates again at its September meeting, but investors are betting that the central bank will start cutting rates soon after that. That's because inflation is starting to come down, and the economy is slowing. However, six Wall Street experts say that investors could be overestimating how much the Fed will cut rates.

Here are their reasons:

1. Inflation is still too high. The Fed's target inflation rate is 2%, but inflation is currently running at 8.5%. The Fed is unlikely to start cutting rates until inflation is much closer to its target.
2. The economy is still growing. The economy grew at a 2.6% annual rate in the second quarter, and it is expected to grow at a similar pace in the third quarter. The Fed is unlikely to start cutting rates until the economy is slowing more significantly.
3. The Fed is committed to fighting inflation. The Fed has made it clear that it is committed to fighting inflation, and it is unlikely to change course until inflation is under control.
4. The Fed is data-dependent. The Fed makes its decisions based on economic data, and it is unlikely to start cutting rates until the data shows that inflation is under control and the economy is slowing.
5. The Fed is worried about financial stability. The Fed is worried that cutting rates too quickly could lead to financial instability. The Fed is unlikely to start cutting rates until it is confident that the financial system is stable.
6. The Fed is concerned about global economic conditions. The Fed is concerned about the global economic outlook, which is slowing. The Fed is unlikely to start cutting rates until it is confident that the global economy is on a solid footing.

Conclusion

Investors are betting that the Fed will start cutting rates soon after its September meeting. However, six Wall Street experts say that investors could be overestimating how much the Fed will cut rates. The Fed is committed to fighting inflation, and it is unlikely to start cutting rates until inflation is under control.