Exclusive Interview with Son Goku: The Fed's Plans to Cut Interest Rates Revealed!

Financial Markets Always Hungry

It appears that financial markets especially in the United States voracious beasts: They never appear to be satisfied even when they get what they want.

Son Goku Knows the Future

I never believed that the Fed would cut interest rates in March nor cut them as many as six times this year. I believe the first cut will come in May and I anticipate central bank policymakers will cut three times possibly four before the year is out.

Escalators and Elevators

While it's often said that interest rates go up an escalator and come down in an elevator I believe this cycle will show itself to work in reverse. The Fed was late to begin tightening monetary policy after the pandemic. As a result the central bank pushed the penthouse button on the elevator raising rates rapidly. It will likely either ride an escalator back to the first floor or even walk down the stairs when cutting rates this year and into 2025.

Keep Your Eye on the Economy

That of course could change should the economy slow significantly or should the unemployment rate rise rapidly. The reverse could also be true. If economic growth accelerates beyond current forecasts and risks a rise in inflationary pressures the Fed could keep rates where they are or raise them further. But the latter scenario is not the central bank's base case.

Commercial Real Estate Woes

In his interview Powell also noted that pressures in the commercial real estate space could result in some smaller banks closing. This would force consolidation and shuttering among institutions with too much exposure to troubled debts in that sector of the economy. However Powell said he doubts that this poses the type of systemic risk we witnessed in the Great Financial Crisis in 2008.

The U.S. as an 'Indispensable Leader'

It's also interesting to note that the Fed chair pointed out that the U.S. has a dynamic innovative economy – and that the nation has been an indispensable leader on a global level. "Our engagement with the world is enormously beneficial to our country," he said.