The Federal Reserve’s upcoming interest rate decision has markets (^DJI, ^IXIC, ^GSPC) on edge, particularly as President Donald Trump advocates for rate cuts. Goldman Sachs Vice Chairman Robert Kaplan shares his perspective on Market Domination regarding the central bank’s likely approach.
Kaplan calls current inflation progress “sideways,” noting mixed economic indicators. He suggests that a pause at the upcoming meeting would be “appropriate,” given the Fed has already implemented 100 basis points in cuts.
He identifies “five big structural changes” influencing the economic landscape: government spending restructuring, industry-wide regulatory reviews aimed at productivity enhancement, efforts to “improve the whole energy ecosystem,” ongoing deportation initiatives, and the proposed tariff strategy.
Kaplan says that uncertainty surrounding the Trump administration’s policies in these areas provides “another reason to pause.”
Regarding Federal Reserve Chair Jerome Powell’s anticipated announcement, Kaplan expects a pause but advises against specifying its duration. “He’s really got to wait until they have conviction on what they’re seeing and they see demonstrable evidence of inflation improvement before they could take any next step,” Kaplan explains.
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