Morgan Stanley's Chethan Ahya tells CNBC that he expects the Federal Reserve to cut interest rates by 50 basis points this week because of weak business investment in the United States.
" Trump has repeatedly criticized the Fed and Powell for not cutting the overnight funds rate.
Ahya said companies are looking at the global slowdown when making investment decisions, and that the Fed will be considering the possibility of the global slowdown spreading to the U.S. in making its decision on rate cuts. "When you're thinking about the economy, the job market and retail sales will be lagging. What is leading is capex and corporate profitability, and that is already deteriorating," Ahya said.
Ahya's expectation is outside of market consensus. Traders have priced in a 76% probability of a 25 basis point cut, according to the CME'sEarlier this month, the market took a speech by New York Fed President John Williams as a sign of an impending 50 basis point cut. However, a spokesperson for the New York Federal Reserve
"was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting."
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