The Fed’s rate cut expected next week is almost certain, but it won’t be enough to jump-start the economy. The main reasons are structural: homes and cars are too expensive, the labor market has weakened, and uncertainty around tariffs and trade policy remains high.
Companies have slowed hiring and investment not because of high rates, but because they don’t know what future trade rules will look like. On top of that, monetary-policy transmission is impaired: mortgage and loan rates aren’t falling in line with Fed cuts, Treasury yields remain high, and mortgage rates may not come down for years.
Consumer sentiment is still weak, and the Fed is trapped between sticky inflation and a fragile labor market. Adding to the complexity is the upcoming choice of Powell’s successor.
For investors, it’s better to focus on sectors less sensitive to interest rates and more driven by earnings growth (Tech, AI-related Industrials, Healthcare).... Show More
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