The Federal Reserve has initiated a rate-cutting cycle, starting with a significant 50 basis point reduction last week. As this new phase unfolds, investors are questioning whether such aggressive monetary easing will continue. Lafayette College Chief Investment Officer Krishna Memani joins Catalysts to share his perspective on the future of monetary policy.

Memani suggests that current interest rates are higher than necessary, citing "the slack that is developing in the labor market." Despite this, he believes the economy is currently in "a good place." Looking ahead, Memani expects rates to follow "a continuous downtrend" in the coming months.

Memani admits he anticipated a more modest 25 basis point cut rather than the 50 basis point reduction implemented last week. He cautions that investors "should not expect" the Federal Reserve to maintain such aggressive 50 basis point cuts going forward.

Regarding future rate decisions, Memani states, "If employment remains strong, I think expecting a 50 [basis point cut] in the next meeting is a bit unrealistic."

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This post was written by Angel Smith