Fed cutting rates may not be enough to prevent looming recession, caution advised

From Investing.com: 2024-08-30 15:32:00

The US economy is weakening, with the prospect of a recession ahead. Reasons why a bounce back is unlikely include record debt levels, low GDP growth predictions, a prolonged inverted yield curve, and the Fed’s balance sheet shrinkage. Consumers’ purchasing power is being eroded by inflation, while banks are tightening lending standards. The Fed’s readiness to cut rates is met with caution, as previous cycles have resulted in major market downturns. The economy is facing three asset bubbles simultaneously, making it fragile. With indicators pointing towards a deflationary recession, a cautious approach is advised.



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