How Many Times Will the FED Cut Interest Rates in the US This Year? Analyst Answered! "But Watch Out for History..."

Kathryn Rooney Vera, StoneX's Chief Market Strategist, shared her views on the Fed's policy outlook on CNBC's Squawk Box program.

Despite ongoing concerns about inflation and economic growth, Vera suggested that the Fed could implement two interest rate cuts this year, but it will not happen until the second half.

Vera began her words by saying, “The markets are closed today due to former President Carter's funeral, but investors are waiting for tomorrow's employment report.” She expressed cautious optimism about the U.S. economy while also acknowledging ongoing inflationary pressures and financial difficulties.

In response to a question about inflation, Vera emphasized that ongoing economic growth above potential could further increase inflation. Vera said, 'If the State Productivity Department fails to reduce spending, then I would be more concerned about inflation' and called on the markets to stay alert.

The US economy, which grew above its estimated potential of 1.8% last year, is expected to maintain a similar momentum in 2025. However, Vera warned that this growth could be inflationary in nature, especially if no significant fiscal tightening is implemented.

Vera believes that it is unlikely for the Fed to make further policy changes in the short term. He said, 'The Fed is on hold for now and probably in the foreseeable future.' However, he warned that if inflation exceeds 3.5%, it could prompt the central bank to reevaluate its neutral stance.

Vera emphasized the importance of being prepared for alternative scenarios, despite predicting two interest rate cuts in 2025. 'What I tell our clients is to protect themselves against the risk of the FED not making any interest rate cuts,' indicating the potential of stronger-than-expected economic growth to delay policy easing.

Vera, who also addressed global investment trends, emphasized that global private investments, which she described as a positive signal for economic growth, are approaching record levels. However, she stated that structurally high inflation could continue to be a problem in the medium term.