Wall Street giants warn: The Fed must cut interest rates significantly in September!

Nigel Green, CEO of deVere Group, one of the world's largest independent financial advisory and asset management companies, warned that the Federal Reserve must take bold action and cut interest rates by a significant 50 basis points in September to address the impending economic storm.

At the time of this warning, the increase in the US July CPI data has heightened expectations that the Federal Reserve will begin easing interest rate controls. The latest data from the US Department of Labor shows that the core CPI rose modestly by 0.2% month-on-month in July.

However, with the economy facing uncertain prospects, consumer confidence showing signs of weakness, consumer spending slowing down, and concerns about corporate profits rising, many believe that a cautious approach may not be sufficient to address the current situation.

Green commented, "The reality is harsh: the Federal Reserve has been behind the curve since the beginning of this cycle, and it cannot afford to make the same mistake again."

He said, "Currently, interest rates are at their highest level in over 20 years, there is no room for hesitation. A 25 basis point rate cut may signal a change in direction, but it is not the aggressive action needed to avoid a potentially disastrous hard landing."

He pointed out, "The reasons for a bold 50 basis point rate cut in September are clear. Such a move would strongly demonstrate the Federal Reserve's commitment to steering the US economy away from the brink of recession. Subsequently, cutting rates by 25 basis points in both November and December would not only address immediate concerns but also lay the foundation for sustainable economic growth."

Powell stated last month that recent inflation data "to some extent bolstered confidence," believing that the pace of price increases is sustainably returning to the Federal Reserve's target level, while testifying before Congress that the economy is "no longer overheated."

Despite critics arguing that the Federal Reserve's cautious pace is to avoid overcorrection, the risks of inaction or insufficient action are much greater.

Green warned, "If the Federal Reserve does not take decisive action, we may face a prolonged period of stagnation, or even worse, a comprehensive economic recession. The risks are higher than ever."

He concluded, "The Federal Reserve needs to stop chasing data and start leading the situation. If a 50 basis point rate cut is not implemented in September, an opportunity will be missed - a mistake that the economy and individuals cannot afford."

He urged, "It is time for the Federal Reserve to take bold action, cut rates significantly, and clearly convey that it is prepared to take all necessary measures to ensure the US economy stays on track."