JPMorgan’s Kelly: Fed Rate Cuts Won’t Boost Growth
JPMorgan Asset Management’s Chief Global Strategist David Kelly told CNBC that while the US economy continues to slow, upcoming Fed rate cuts are unlikely to reverse the trend. Pointing to a weak August jobs report and other indicators, Kelly said the economy is decelerating but not yet in recession, with existing headwinds deepening. He warned that lower rates would cut retirees’ interest income and merely signal further easing, doing little to spur borrowing or investment. Drawing on the last two decades of data, including post-2008 cuts, Kelly concluded that Fed rate cuts have failed to stimulate sustainable growth. Traders should temper expectations that monetary policy alone can rescue the economy.
Bearish
David Kelly’s warning that Fed rate cuts won’t spur real growth weakens expectations for effective monetary support. By highlighting a slowing US economy and past failures of rate cuts to drive sustainable expansion, the news dampens risk appetite. In the short term, traders may still bid up markets on rate-cut hopes, but without underlying growth the rally is likely shallow. Over the long term, persistent economic headwinds and stagnant investment demand could keep crypto and equity markets under pressure, mirroring muted responses seen after post-2008 rate cuts.