Experts Warn Fed Against Rate Cuts Despite 99% Market Confidence

While Wall Street could also be satisfied the Federal Reserve (Fed) is about to slash rates of interest, many specialists argue the laborious financial information says in any other case.

Meanwhile, Bitcoin (BTC) is making an attempt a restoration, reclaiming above the $111,000 threshold after displaying weak point earlier within the week.

Why Experts Say Cutting Rates Now Could Backfire

According to the CME FedWatch Tool, markets are pricing in a 99.6% chance that the Fed will lower charges at its September assembly.

With barely two weeks to the subsequent FOMC assembly, merchants deal with easing as a close to certainty. They guess a softer coverage stance will ignite one other spherical of liquidity-driven asset rallies.

However, analysts warn that this consensus rests extra on sentiment surveys than on precise financial fundamentals.

Hard Data vs. Soft Narratives

Justin D’Ercole, founder and CIO at ISO-MTS Capital Management, advised TradFi media that the laborious information alerts the Fed shouldn’t lower charges.

He argued that policymakers threat being swayed by a false narrative arising from delicate financial surveys.

D’Ercole famous that these surveys solely mirror shopper frustration with high costs however fail to seize the broader energy of the economic system.

“The economic system is rising at potential, inventory valuations are excessive, inflation is working at 3%, and unemployment stays traditionally low,” The Financial Times reported, citing D’Ercole.

He added that obtainable combination labor income is rising at a 4–5% tempo, whereas bank card delinquencies are down 12 months over 12 months. Even industrial actual property, usually painted as a looming disaster, exhibits enhancing asset high quality and decrease mortgage delinquencies.

Markets Want Cuts, But Data Says Otherwise Amid 2024 Echoes

Elsewhere, Kurt S. Altrichter, founding father of Ivory Hill, echoed the sentiment. In a current publish on X (Twitter), he referred to the PCE (Personal Consumption Expenditure) inflation information.

“Core PCE is again at 2.9%. Inflation isn’t useless, it’s re-accelerating. GDP simply printed 3.3%. That’s not a backdrop for price cuts. If the Fed forces the lower by, it’s probably the one lower earlier than Powell’s time period ends on May 15, 2026. Remember: the market needs a rate-cutting cycle. The information says no,” Altrichter articulated.

Altrichter argued that the danger is that the Fed will cave to market pressure on the expense of its long-term credibility in its inflation combat.

Other observers warn of economic market instability if the Fed repeats the 2024 playbook. Independent analyst Ted in contrast the present setup to September 2024.

A surprise interest rate cut last year initially drove crypto markets increased earlier than triggering a pointy reversal.

“September 2024 Fed lower charges, and #Altcoin MCap pumped 109% in simply 3 months. After that, $BTC dumped 30%, whereas alts crashed 60%-80%. In September 2025, the Fed will lower charges once more and decide to extra cuts. It looks as if historical past will repeat itself. First, a pump for 1–2 months after which a serious crash,” wrote Ted.

The broader debate boils all the way down to credibility versus aid. Cutting charges might quickly ease stress on indebted households and companies. However, critics argue it dangers fueling inflationary pressures, asset bubbles, and long-term instability.

“Is saving extra marginal jobs within the US economic system now extra essential than sustaining inflation-fighting credibility and monetary stability for all customers?” D’Ercole posed.

With markets already celebrating a lower but to occur, the Fed faces considered one of its hardest coverage assessments in a long time, deciding whether or not to observe the information or the group.

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