Fed Rate Hike Bets On Collision Course With Fed's Own Data
A Fed rate rise in September would be a costly overreaction to a story the numbers no longer support, warns the CEO of one of the world's largest independent financial advisory organisations.
Nigel Green of deVere Group's
Inflation, Nigel Green notes, is easing rather than accelerating. July's consumer price index rose 3.4% year over year, down from 3.5% in June, with the monthly gain slowing to just 0.1%.
AdvertisementThe bigger complication, he argues, sits in the labour market. July's jobs report showed the US economy unexpectedly shed 23,000 positions, while unemployment climbed to 4.2%.
Politics adds another layer to the standoff. Warsh was appointed by President Trump, who has pushed relentlessly for cheaper borrowing and openly criticised Warsh's predecessor for moving too slowly on cuts, with November's midterms only weeks after the September decision.
August's CPI report, due 11 September, lands just days before the vote and could still move the needle either way, he acknowledges.
Nigel Green adds that Warsh's insistence on a fixed 2% target, and his refusal to offer forward guidance, points to a chairman building room to manoeuvre rather than one locking in a decision.
Asked for his final call, Nigel Green is direct.
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