The Federal Reserve recently announced a 25 basis point interest rate cut while projecting only two cuts for 2025. Some market participants are growing concerned that the Fed might resume rate hikes in the coming year.
Miramar Capital co-founder and senior portfolio manager Max Wasserman shares his perspective on the Fed's monetary policy outlook and its market implications on Catalysts.
Wasserman suggests the Federal Reserve might raise rates next year, arguing that the current cutting cycle was "too aggressive easing" given the economy's strength. "It just doesn't warrant an aggressive cutting," he adds.
He emphasizes that the first quarter of 2025 will be crucial in determining the Fed's annual strategy, citing factors such as economic robustness, new fiscal spending policies, and potential changes to immigration and tariffs.
Wasserman asserts that a rate hike is "very realistic" and could occur in 2025's second quarter. "If the economy is not slowing down, if inflation is as sticky as everyone believes it to be, then the Fed is basically overshot on cutting. So I hope they don't have to do an about-face. I hope there's not inflationary pressures, but it looks like with the new policies coming in and the growth, it's very hard to justify easing," Wasserman explains.
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Regarding investment strategies, he advises investors to de-risk in the current environment, favoring dividend stocks and short-term bonds, saying that "it pays to be cautious."
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
This post was written by Angel Smith