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Fed may be forced into emergency rate cut before May meeting, JPMorgan executive suggests
The Federal Reserve (Fed) might need to reconsider its stance and implement an emergency rate cut before its scheduled May meeting amid the ongoing market turmoil, according to Bob Michele, Global Head of Fixed Income at JPMorgan.
Michele expressed his concerns over the Fed’s reluctance to act promptly in response to the recent market downturns. The analyst emphasized that the central bank cannot afford to wait for a systemic breakdown or a complete collapse before intervening. Instead, he believes it is essential for policymakers to address the underlying issues as soon as possible to prevent further damage.
The JPMorgan executive highlighted the potential catastrophic consequences of inaction, citing the vulnerability of lower-rated businesses and the heightened risk of a huge collapse if left unchecked. He urged the Fed not to wait for clear signs of economic stress before taking action, arguing that such an approach is too late.
In his comments, Michele also criticized the idea of waiting for the long lag times to take effect, stating that this would be a mistake on behalf of policymakers. The analyst believes that the recent market drops signal deeper economic problems and urged the central bank to address these issues promptly.
The CME FedWatch Tool currently shows only a 34% chance that the Fed will lower rates at its May meeting, indicating that most market participants still expect a June rate cut, with odds of around 98%.
Source: https://cryptobriefing.com/fed-emergency-rate-cut-may-discussion/
