Amid debate over the potential course of the Fed's interest rate decisions, JP Morgan's chief US economist Michael Feroli assessed the outlook following the latest employment report on CNBC's 'Squawk on the Street'.
Michael Feroli: “Interest Rate Cut in June”
The conversation revolved around whether the latest jobs report would change expectations for a rate cut in the first quarter. Feroli said the data could temper expectations for an immediate interest rate cut, expressing the view that a sharp downturn or significant economic turmoil would be required to justify a rate cut in the first quarter.
Evaluating employment and wage growth in the fourth quarter, Feroli acknowledged that there was a slowdown, but emphasized that growth was still relatively strong. Pointing out various indicators that indicate that employment growth may slow down further in the coming months, Feroli said that a real negative figure may not emerge in January or February.
Regarding the disagreements between JP Morgan and Goldman Sachs economists on the timing of the interest rate cut, Feroli emphasized the importance of continuing the moderate course in labor costs before the FED cuts interest rates and stated that the central bank should avoid sudden reversals in policy.
Feroli predicted a possible interest rate cut in June and expressed confidence in this prediction following the latest economic data. However, he warned against premature celebrations over inflation control, citing potential risks from international tensions that could disrupt supply chains and reverse the recent softening in goods prices.
*This is not investment advice.