Fed's Waller: Weak inflation data cemented case for 50 basis point cut

Published On Sep 20, 2024, 12:40 PM

Federal Reserve Governor Christopher Waller indicated that recent weak inflation data supports a significant interest rate cut of 50 basis points in the upcoming policy meeting. He expressed concern that inflation rates are falling below the Fed's target of 2%, especially noting the core Personal Consumption Expenditures (PCE) index is likely to be under this target. Waller mentioned that continued incoming data will influence decisions regarding future cuts, signaling a willingness to act aggressively if inflation remains subdued.

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Stock Forecasts

XLFView XLF chart on TradingView

Negative

Given the expectation of an interest rate cut, financial stocks may face headwinds as lower rates generally reduce their profit margins. Conversely, sectors such as consumer discretionary and technology that benefit from lower borrowing costs could see a positive reaction.

VNQView VNQ chart on TradingView

Positive

Real estate investment trusts (REITs) could benefit from lower interest rates, making them a potential area for investment as reduced rates may enhance property valuations and income from rentals.

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