00:00 Josh Lipton
A lot of focus on the Fed from Wall Street and what the interest rate path forward will be ahead of July’s FOMC meeting. Our finance’s senior reporter Allie Canal joins us now with our investor playbook, Allie.
00:12 Allie Canal
Yeah, Josh, strategists have told us that it’s the million dollar question right now. Will the Fed cut rates in September or wait even longer? Goldman Sachs now expects the first rate cut in September. That’s up from its previous December projection, citing weaker tariff effects and a cooling labor market. But not everyone’s buying that timeline. Some strategists are warning that the Fed may sit tight with inflation risks still lingering and tariffs adding new uncertainty. Investors are going to get their next big test with that with the release of the June CPI report out next week, and that has been trending lower on a month-over-month basis. But any upside surprise could shake those rate cut bets. Here’s what some on Wall Street told us this week.
01:03 Speaker A
Tariffs which has surprised a lot of people, for sure. Um but and and that’s happened because the service sector inflation that’s come down, come on. Inflation has come down generally because of oil prices staying lower as well. But the Fed is focused on inflation because they’re worried about goods inflation and that will accelerate.
01:30 Speaker B
And I think the Fed is going to continue to take a wait and see approach. Right now there’s a 30% odds of no rate cut at the September meeting, and I’m not I’m not predicting a a Fed rate cut in September either. I think they’re going to stay on the fence as long as they possibly can.
01:54 Speaker C
And the last thing is the fact that the Fed may sit on their hands longer than what’s currently being priced into the markets. Um that September rate cut is getting pushed out potentially to November or December, October or December. Um and if that happens, um that means that some of the companies that don’t have as many offsets to um the tariff pressures that you’re going to see may continue to struggle this in this environment.
02:31 Allie Canal
And sources tell me to expect some volatility if we don’t get that September rate cut, especially since that’s what markets are currently pricing in. But the good news here, Josh, is that we do have other positive catalysts within this market, earnings for example. That’s going to be a very important factor that can keep this rally going. We’ve seen solid results so far from Delta and Levi’s, and we have a heck of a lot more companies reporting next week. So wait and see for that, and also wait and see for the Fed for the time being.
03:04 Josh Lipton
All right. Thank you, Allie.