SoFi Technologies CEO: Expects the Fed to cut rates by 75 basis points this year
SoFi CEO Anthony Noto expects the Federal Reserve to cut interest rates by 75 basis points in 2024, which will stimulate loan demand and release investment cash. He proposed an immediate 50 basis point rate cut to boost economic activity. In addition, he stated that SoFi will optimize its balance sheet in a low interest rate environment, increase the underwriting of home mortgages and student loans to address the significant growth in loan demand. SoFi's stock price has risen slightly, but overall it has fallen by about 28% this year
According to CNBC, SoFi Technologies (SOFI.US) CEO Anthony Noto expects the Federal Reserve to cut interest rates by 75 basis points in 2024. He believes this move will benefit the company's loan demand and release investment cash for other companies. Noto stated on Monday that policymakers should start cutting rates immediately, with a significant 50 basis point cut.
He said, "It's much better to cut rates by 50 basis points now because it will stimulate more economic activity next year as businesses are making decisions for next year. If they know they can reduce the cost of debt on their balance sheet by 50 basis points, they can increase hiring, increase investment, or even just get a signal of a rate cut."
Noto mentioned that SoFi is facing prospects of operating in a "stable" economy with lower interest rates, providing the company with "more freedom" on its balance sheet. He added, "We will underwrite as much mortgage business as possible because it's light capital in nature. In terms of student loans, we will also be very aggressive in lowering rates to provide good savings for people."
Noto stated that overall loan demand has "significantly increased" over the past 18 months. He further commented, "Another 100 basis point cut will only make these loans more attractive to buyers, and we have some other projects as well."
The reduction in corporate borrowing costs will allow them to reduce debt expenses and allocate more funds to technology and hiring, which will benefit SoFi's technology platform business, according to Noto.
Noto mentioned that the "most underrated" aspect of SoFi's business is creating "products on top of products." Among potential products, the company is internally testing a product called "Cash Coach," which will review all cash held by SoFi and other interconnected places and advise users on how to better optimize their funds.
SoFi's stock price closed up 1.2% on Monday. The stock has fallen by about 28% year-to-date, while the S&P 500 index has risen by approximately 15% during the same period
