The Fed Will Cut Rates Despite Inflation—And It Will Backfire

Evidence:

• Stubborn Inflation: Inflation has remained above target, yet the Fed has signaled a cautious approach and potential rate cuts later in the year.
• Market Expectations: Forecasts suggest a total of 60 basis points in rate cuts, despite ongoing inflation risks.

Unique Take:

Cutting rates in the face of persistent inflation could undermine the Fed’s credibility and trigger another wave of volatility, as investors lose confidence in the central bank’s ability to control prices.