Grant Cardone is stirring the pot again. The entrepreneur and real estate mogul tweeted, “U.S. inflation of 2.7% is higher than the real economy. FED is lagging and KNOWS it. Watch for a surprise .50bp cut in December.”
Cardone’s take is bold, but it’s not without reason. Inflation was 2.7% as of November, slightly above the Federal Reserve’s target of 2%. Despite a series of rate hikes this year, Cardone thinks the Fed is behind the curve. And he’s not alone in pointing this out.
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The Fed has been trying to cool inflation for months without tanking the economy. The central bank raised rates to their highest levels in over two decades. However, Cardone suggests this approach might not be working fast enough, implying a major course correction could be coming.
A surprise 50 basis point rate cut would be a shocker. Most analysts expect the Fed to hold steady or make modest tweaks. A big slash like this could signal serious concern about the economy’s health – or a shift in strategy to stimulate growth.
Opponents of Cardone’s view argue that inflation isn’t the only metric the Fed considers. The labor market remains strong with unemployment near historic lows. Wage growth is also steady. For some, these are signs that the economy is holding up fine.
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Michael Feroli, chief U.S. economist at JPMorgan Chase, said recently, “Regardless of exactly what policies are introduced, a change in the party occupying the White House creates some new unknowns for the economy. This argues for a more gradual pace of interest rate cuts.” J.P. Morgan Research predicts the Fed to cut rates by another 25 bp in December with cuts only once per quarter in 2025.
After all, the Fed’s focus is broader than just inflation. A sudden rate cut could risk overheating the economy again.
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Others worry about credibility. A dramatic pivot might send mixed signals to markets. The Fed has worked hard to project stability and caution in recent years, but a surprise cut could disrupt that.
Still, as usual, Cardone isn’t backing down. His tweet hints at a deeper issue: the Fed might be reacting too slowly. “Lagging” is a strong word, suggesting that, in Cardone’s eyes, the central bank is behind the times.
Whether you agree with him or not, his prediction is one to watch. The next Fed meeting in December could bring unexpected moves. A rate cut, especially one as large as 50 basis points, would ripple through markets, hitting everything from mortgages to savings accounts.
Cardone’s advice? Stay tuned. If he’s right, December could shake things up.
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This article ‘The Fed Is Lagging And Knows It,’ Says Grant Cardone, Hinting At December Surprise Rate Slash originally appeared on Benzinga.com
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Source: finance.yahoo.com