Interactive Brokers Senior Economist José Torres joins Market Domination to share his consumer inflation forecasts for 2025, expressing concerns about recent monetary policy decisions.
Torres critiques the Federal Reserve’s September 2024 decision to cut rates by 50 basis points, arguing this hasty move “pigeonholed” the central bank into making subsequent 25-basis-point cuts at the following two meetings. “Is it a coincidence that CPI [consumer price index] bottomed that same month at 2.4%?” he asks hosts Julie Hyman and Josh Lipton, noting that inflation is now trending toward 3%.
Torres warns of one significant risk: if inflation accelerates to 3.5%, “the Fed may have to turn around and start hiking.” He estimates a 25% probability of this outcome materializing.
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