On September 5, George Lagarias, chief economist at Forvis Mazars, said he would "firmly" stand in the camp calling for a 25 basis point rate cut. Lagarias said: "I don't think there is an urgency to cut interest rates by 50 basis points. A 50 basis point rate cut may send the wrong message to the market and the economy. And as we all know, a recession may be a self-fulfilling prophecy."
Strategists generally see a 25 basis point rate cut as the most likely outcome for the Fed’s upcoming meeting, though recent economic data appears to strengthen the case for a bigger move. Data on Wednesday showed U.S. job openings fell to their lowest level in 3-1/2 years in July, seen as another sign of labor market weakness. Market participants firmly expect the Fed to cut rates at this month’s policy meeting, though bets on a 50 basis point cut increased after the job openings data was released.
Lagarias said: "There is no doubt that a slowdown is happening, but I think we are far from a recession. The job market is declining, and some of it has to do with increased supply rather than reduced demand." He further explained: "Yes, job openings are weaker and manufacturing is weaker, but we expected this slowdown and it was expected by everyone. There is no evidence of a recession. At this point, I don't think the Fed will act very aggressively." Lagarias is not the only one who warned the Fed not to cut interest rates by 50 basis points this month. Mohit Kumar, chief financial economist for Europe at Jefferies, said on August 13 that there is "absolutely no need" for the Fed to cut interest rates by 50 basis points at its September meeting. (Jinshi)
