Fed must cut rates by 50 basis points says Nigel Green image credit shutterstock

The US Fed has kept its key lending rate at around 5.3% since July 2023, a two-decade high. That is too high and for too long, according to Nigel Green.

The deVere Group CEO argues that the Fed is in danger of overseeing the US economy plunging into recession. He says that a cut of 50 basis points is essential at the first opportunity.

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“As the Fed is winning the war on inflation – now we must look to the broader economy which is standing on a knife edge,” says Green

“Consumer confidence is wobbling, spending is slowing, and corporate earnings are under threat. The Fed cannot afford to tiptoe around these warning signs with a cautious 25-point cut. It’s simply not enough.

“The truth is, the Fed was too slow to act when this cycle began. A small cut might signal a shift, but it won’t deliver the jolt needed to prevent a potential hard landing.”

A 50-basis point cut in September would send a powerful message to the markets, “that the Fed is serious about steering the US economy away from the brink.”

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The deVere Group concludes: “The Fed must stop playing catch-up and start leading the charge. Anything less than a 50-basis point cut in September would be a missed opportunity – one that the economy, and Americans, can’t afford.

“It’s time for the Fed to act boldly, cut rates aggressively, and send a clear message that it’s ready to do whatever it takes to keep the US economy on track.”

Powell says ‘time has come’

​Last week, the Federal Reserve chair Jerome Powell said in a speech that “the time has come” for officials to cut interest rates. But he made no comment about timing or how far borrowing costs might be reduced.

He has argued that the US economy has coped with higher interest rates, highlighting the level of job gains. However, US unemployment is has grown to 4.3% from 3.5% a year ago.