Grant Cardone, the real estate mogul known for his bold commentary, has sparked debate with his latest prediction.
In a tweet, he claimed, “U.S. inflation of 2.7% is higher than the real economy. FED is lagging and KNOWS it. Watch for a surprise .50bp cut in December.”
While some may dismiss his prediction as dramatic, the numbers provide context. Inflation stood at 2.7% in November, exceeding the Federal Reserve’s 2% target.
Despite raising interest rates to their highest levels in more than two decades, the Fed has struggled to cool inflation without stifling economic growth.
Cardone suggests the central bank may be trailing behind, hinting at a significant policy shift in December.
A 50-basis-point rate cut would be an unexpected move, given that most analysts predict the Fed will maintain rates or make only minor adjustments.
Such a significant cut could signal mounting concerns about the economy’s momentum or reflect a bold attempt to stimulate business activity in uncertain times.
However, not everyone agrees with Cardone’s assessment. Critics point out that inflation is just one factor the Fed considers.
The labor market remains strong, with unemployment near historic lows and steady wage growth, indicating resilience in the broader economy.
Michael Feroli, chief U.S. economist at JPMorgan Chase, commented that economic uncertainties might warrant caution.
He noted, “Regardless of exactly what policies are introduced, a change in the party occupying the White House creates some new unknowns for the economy. This argues for a more gradual pace of interest rate cuts.”
JPMorgan’s projections lean toward a conservative path, forecasting a 25-basis-point cut in December followed by gradual reductions through 2025.
Abrupt changes, as Cardone predicts, could risk undermining the Fed’s credibility, which has been carefully maintained to instill market confidence.
Still, Cardone’s critique of the Fed “lagging” highlights a broader concern about whether the institution is responding swiftly enough to evolving economic conditions.
If the Fed surprises with a sharp rate cut, the effects could ripple across markets, impacting everything from mortgages to savings and signaling a new direction in monetary policy.
As December approaches, all eyes will be on the Fed’s decision. A bold move, if it comes, could reshape expectations for 2024 and beyond.
You May Also Like:
