- Wall Street guru Jim Grant told Fox Business Network that inflation is “permanent.”
- Grant said the Fed is likely to cut rates later, rather than earlier.
- Mr. Grant has been the editor of the Grant Interest Rate Observer for the past 40 years.
Market participants who were expecting the US Federal Reserve to cut interest rates soon may be disappointed.
Jim Grant He, who has edited the Grant Rate Observer for the past 40 years, expects Fed Chairman Jerome Powell to be cautious because inflation remains above the central bank’s target level.
“I think Chairman Powell still regrets the Fed’s failure to identify the spike in inflation that began in 2020 and 2021,” Grant said. I don’t want to do that,” he said. fox business network on tuesday.
Although the Federal Reserve described high inflation in 2021 as “temporary,” prices continued to rise, hitting a 40-year high of 9.1% in June 2022, before easing.
“Inflation is not a temporary thing,” Grant told the network. “It’s permanent in that you can never regain the purchasing power you lose to inflation.”
To control inflation, the Fed does the following: raised interest rates Eleven measures have been taken since March 2022 to curb spending and curb price increases. Interest rates have remained unchanged since July.
Grant did not say when the Fed would begin lowering rates, but said it would be gradual and “slower than the market expects” as it waits for inflation to fall to its 2% target. “It is highly likely that this will happen.”
The US consumer price index in November rose 3.1% year-on-year; Bureau of Labor Statistics he said on Tuesday.
Mr. Grant’s assessment was released ahead of the Fed’s indication on Wednesday whether it will continue its pause on rate hikes.
At least one bank (ING) expects the Fed to cut rates as early as the second quarter of next year. Meanwhile, Swiss bank UBS expects the Fed to cut interest rates by 275 basis points (2.75 percentage points) next year.
The Fed itself expects to cut interest rates by 25 basis points (0.25 percentage points) throughout 2024.
