Spartan Capital Securities: U.S. inflation may have peaked, but a rate cut of 25 or 50 basis points is still controversial

ChainCatcher news, Peter Cardillo, Chief Market Economist at Spartan Capital Securities, stated that today's PCE report shows very good numbers, and of course, they indicate that inflation has peaked and is continuing to decline. Personal income (growth) is not very strong, while consumption continues to rise, suggesting that the likelihood of a recession in the first six months of 2025 is at most minimal.

It is clear that the Federal Reserve will cut interest rates, and I think there is still debate about whether the cut will be 25 or 50 basis points, which will entirely depend on next week's employment data. If the data is much weaker than expected, assuming (job growth) is less than 100,000, then the likelihood of a 50 basis point cut will increase, especially if inflation is moving in the right direction.

He stated, "I expect the Federal Reserve to have three rate cuts, with a possible 0.5 percentage point cut in September, depending on the employment data. Otherwise, there will be a 25 basis point cut in September and a 50 basis point cut in December."