George Lagarias, chief economist of Forvis Mazars, has expressed a firm preference for a 25 basis point rate cut by the Federal Reserve. Lagarias believes that a more aggressive 50 basis point cut could send the wrong message to the market, potentially fueling recession fears and becoming a self-fulfilling prophecy.
While a 25 basis point cut is widely anticipated by strategists, recent economic data, including a significant drop in job openings in July, has prompted some to advocate for a larger cut. However, Lagarias cautions against such a move, emphasizing that while a slowdown is evident, the economy is not yet in a recession.
Lagarias points to the increase in labor supply as a contributing factor to the decline in job openings, rather than solely attributing it to reduced demand. He maintains that the current economic situation does not warrant aggressive action from the Fed.
Mohit Kumar, chief financial economist for Europe at Jefferies, echoes Lagarias’s sentiment, stating that there is “absolutely no need” for a 50 basis point rate cut in September.
