Consumer sentiment has improved ahead of anticipated Federal Reserve interest rate cuts, with the University of Michigan’s Consumer Sentiment Index for September registering a reading of 69.0. BMO Wealth Management US Chief Investment Officer Yung-Yu Ma joins Catalysts to share his outlook on monetary policy in light of this report. Ma contributes the rise in consumer sentiment to a “relatively stable job market” and ongoing disinflationary trends. Regarding the Fed’s next move, he believes the central bank is likely “leaning toward a 25-basis-point cut,” although he argues that a 50-basis-point reduction would be “justified” given cooling inflation and a softening labor market. “We do think the Fed is a little bit behind the curve here,” Ma tells Yahoo Finance, suggesting that the Fed has been overly focused on backward-looking data rather than forward-looking indicators. He predicts continued rate cuts throughout the rest of 2024 and into 2025, emphasizing that “the trajectory is ultimately what’s most important.” For more expert insight and the latest market action, click here to watch this full episode of Catalysts.
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