“I think there is a lot of caution in the Fed that they don’t want to get it wrong again.” – 02:51
James Knightley, Chief International Economist at ING, joins Remy Blaire at the New York Stock Exchange to discuss the current economic landscape. They begin by emphasizing the importance of the Fed meeting scheduled for September 16th to 17th. James highlights that there are already two voters in favor of a 25 basis point rate cut, suggesting that the Fed may be preparing to act preemptively to avoid a significant rise in unemployment.
As the conversation unfolds, Remy and James explore the various economic indicators that will be released throughout the week, including ADP employment figures and jobless claims. James addresses the uncertainty surrounding tariffs and their potential impact on inflation, drawing parallels to the inflationary pressures experienced during the COVID-19 pandemic. He argues that while tariffs may lead to short-term price increases, several key factors—such as declining oil prices, a cooling housing market, and subdued wage growth—indicate that a repeat of past inflationary trends is unlikely.
The discussion then shifts to the recent revisions in GDP growth, which have been adjusted to 3.3%. While this figure appears robust at first glance, James cautions that it is largely influenced by trade volatility. He provides a more nuanced perspective, suggesting that the average growth rate over the past two quarters is closer to 1.6%, reflecting a cooler growth narrative moving forward.