July 11, 2024
By Peter Bower
Finally, interest rates will soon begin declining. The Lonely Bull just hopes they are not too late to arrest the slowing of our economy. Inflation is within striking distance of the Federal Reserve’s two percent target and has been for some time. Therefore, there is plenty of justification for lower interest rates. The latest inflation reports reinforce the notion that higher rates are no longer necessary.
Monetary policy works with lags. Lower rates will take time to affect behavior, so the sooner the better. A softening economy can get downside momentum as more and more consumers who fear for their own prospects pull back. Corporations will then do the same. Once this gets going, it is difficult to stop. Hopefully, there is still time to pull off a soft landing.
When will the first rate cut take place? It should be during the upcoming July Fed meeting but may not happen until the September one. Stock investors are already anticipating it. As a result, there should begin to be a broadening out in the number of stocks showing positive performance. Let’s just keep our fingers crossed that the cuts are soon enough to arrest any negative spiral. The Bull and his partners are watching this closely. Stay steady my friends.
The Lonely Bull
