CIO Tom Graff, CFA Quoted by Invezz on Federal Reserve Interest Rate Policy
Invezz featured Facet’s Chief Investment Officer Tom Graff, CFA, to break down the Fed’s decision to hold interest rates and what it signals for broader market conditions.
I believe this was a mistake: the Fed should have hiked today. There isn’t any material difference between hiking now and hiking in December, especially since a December hike is fully priced in. Hiking today would have bolstered Warsh’s credibility as an inflation fighter. By waiting, he risks coming off as hesitant, or worse, complacent. I believe the risk is to the upside. As long as the AI infrastructure buildout continues at a breakneck pace, broad economic growth will be relatively strong. Job growth might be mediocre, but we’ve already seen that inflation can stay stubbornly high even with a somewhat soft labor market. The geopolitical risk also looks skewed to the upside. If the status quo holds in Iran, oil prices stay high, and any escalation would only add to that risk.