Federal Reserve Chairman Powell held a press conference in Washington, DC on September 18, 2024.
Mandel and | AFP | Getty Images
The Fed’s move Interest rates cut by 50 basis points Get the U.S. economy back on track soft landingaccording to Goldman Sachs” CFO.
His comments were made as a market participant question Whether the Federal Reserve’s sharp interest rate cuts can be implemented in time to reduce inflation without pushing the economy into recession.
some analysts believe raised concerns Regarding the U.S. economic outlook, it warned that similar deep interest rate cuts would not avert the recession and global financial crisis of the early 2000s.
The rate-setting Federal Open Market Committee voted Wednesday to cut its benchmark overnight borrowing rate by half a percentage point, or 50 basis points, to a target rate of 4.75% to 5%, a decision that surprised some economists. 1 basis point equals 0.01%.
This is first The Federal Open Market Committee (FOMC) has cut interest rates this much since the early days of the coronavirus pandemic and the 2008 global financial crisis before that.
“I think the first 50 basis points rate cut is a clear signal of a new direction. Hopefully that will unleash more confidence and significantly lower the cost of capital – perhaps for some more strategic activity heading into the end of the year this year,” said Goldman Sachs chief executive Chief Financial Officer Dennis Coleman told CNBC’s Annette Weisbach on Tuesday.
“As we move into 2025, we are on track to improve the backlog and increase activity across the market,” he said.
Asked whether a rate cut by the Federal Reserve might ensure a soft landing for the U.S. economy, Coleman said he hopes and expects that to be the case.
“Right now, that’s the consensus,” Coleman said. “Managing an economic transition is always a very tricky job. But you know, inflation levels are coming down, unemployment is manageable, they’re starting to cut interest rates and maintain a soft landing trajectory.”
Dimon: ‘Let me be cautious’
Not everyone is convinced that the U.S. economy will continue to grow in the coming months.
“I’m a long-term optimist. In the short term, I’m more skeptical than others that everything is going to be okay,” J.P. Morgan CEO Jamie Dimon explain An exclusive interview with CNBC-TV18 released on Tuesday.
“The market is pricing things like they’re going to be great. That makes me cautious about that,” he added.
—CNBC’s Jeff Cox contributed to this report.
