Key dealers
- The Fed is facing pressure to consider an emergency situation that is a cut in the midst of the market’s concern.
- JPMorgan’s Bob Michele raised the flags that companies are under load.
The Federal Reserve may need to implement an emergency cut before the scheduled may face due to serious market stress, says Bob Michele, global director of interest recipients at JPMorgan Asset Management, in a new interview With Bloomberg monitoring.
The US stock market enters its third commercial session after losing over $ 5 trillion just two days after President Trump revealed an aggressive customs policy.
Michele said that the market chaos last week was exceptionally serious, comparable to historical crises -1987-share market, the 2008 financial crisis and the downturn from the Covid-19 market.
In previous crises, Fed acted quickly with a decision to lower prices. Michele suggested that current market conditions may require similar intervention, which means that Fed may not be able to wait until May to lower prices.
“I don’t know if they can even come to the corn meeting before they start lowering prices.”
Ever since Trump started his second term and threatened tariffs on imports from American key partners such as Canada, Mexico and China, Fed President Jerome Powell has repeatedly said that the central bank is not in a hurry to adapt its policy.
In a statement last Friday, Powell Fed’s cautious approach to speed adjustments repeated.
He emphasized that Trump’s new customs are likely to cause higher inflation And slower economic growth in the United States. Fed has committed to anchor inflation at a rate of 2%.
When he commented on the Fed’s current attitude to waiting for clear signs of financial stress before he acted, Michele expressed doubt that the central bank could wait until its upcoming meeting, scheduled for May 7, to start lowering interest rates.
“They talked about the long, endless delays. So now they say they will wait for the accident before they respond and then wait for the long, endless delays to take hold,” he said. “I don’t think so.”
The analyst is critical of the idea that the Fed would wait for the injury and then wait for its policy to take effect.
With the help of arguments that there is no evidence of a systemic division yet, Michele said that the latest market is losing signal deeper financial problems, especially with lower ranked companies.
“I think if you go back and look at the whole of what is happening, you can’t think there is nothing under the surface that will break,” Michele added.
Michele also noted that vulnerable companies that have already struggled with debt are now facing a package of higher loan costs, lower sales and higher expenses. These underlying issues are likely to worsen and cause a huge collapse if the Fed does not take action.
“This is a serious moment. I don’t think the Fed can only sit on the side,” Michele said.
The CME FEDWATCH tool Shows only a 34% chance that Fed will lower interest rates at their corn meeting.
While this figure has fluctuated, the majority of market participants still see a reduction in June as more likely, with odds of about 98% from the latest data.
Traders also price that Fed will adjust prices at meetings in November and December 2025.
Trump has constantly urged the Fed to lower interest rates. In January, the president demanded lower interest rates immediately and claimed that better monetary policy was needed to support the economy.
When the Fed maintained its interest rates and predicted two cuts for the year, Trump encouraged the central bank to lower interest rates to facilitate the economic transition to its customs policy.
He continued to advocate for interest rate cuts before Powell’s speech last week and found that it was a “perfect time” for Fed at lower prices.
