Alexandra Wilson-Elizondo, co-head of multi-asset solutions at Goldman Sachs Asset Management, shared her expectations for the Fed meeting in an interview with CNBC.
Wilson-Elizondo said the Fed expects a 25 basis point rate cut at its meeting tomorrow. However, he noted that Chairman Jerome Powell is likely to deliver hawkish messages at the press conference. “The most important points will be Powell’s statements, the forward-looking interest rate path, and especially the differences in voting within the Fed,” he said.
Wilson-Elizondo, noting that inflation is still far from the Fed’s 2% target, said, “While inflation has improved structurally, it is still trending sideways. Despite this, the weakening of the labor market is the main factor forcing the Fed to cut interest rates.”
Regarding market reactions, the Goldman Sachs executive stated that they expect a sideways trend in bonds, while they anticipate a positive outlook for stocks, particularly driven by investments in artificial intelligence. “Following non-recessionary interest rate cuts, stocks typically rise an average of 15% within 12 months,” Wilson-Elizondo said.
Stating that artificial intelligence investments are a major supporting factor for the market, Wilson-Elizondo said, “This is no longer speculative growth, but a permanent growth story.”
Finally, Wilson-Elizondo stated that interest rate cuts are critical for all segments of the economy, from consumers to companies, adding, “Both FED policies and the artificial intelligence theme will continue to be decisive for the markets.”
*This is not investment advice.