Odaily News Dr. Doom’s Nouriel Roubini has a new warning for Wall Street: Traders should reduce their bets that the Federal Reserve will cut interest rates more aggressively to mitigate the impact of President Donald Trump’s trade war.
Roubini, a famous economist known as "Dr. Doom" for accurately predicting the global financial crisis, believes that the United States will avoid a recession and the Federal Reserve will keep interest rates unchanged for the rest of the year after the tariff-related policy dispute eases. "This is certainly a head-to-head battle between the Trump bottom and the Powell bottom," Roubini said, "but I would say that the strike price of the Powell bottom will be lower than the Trump bottom, which means that Powell will wait until Trump blinks first."
Fed Chairman Powell said last week that the economic impact of the new tariffs may be far greater than expected, and the central bank must ensure that this does not lead to more serious inflation problems. This week, traders digested the expectation that the Fed would cut interest rates three to five times, 25 basis points each time, and some on Wall Street even believed that the central bank might urgently cut interest rates before the next meeting. (Jinshi)