Rate Cuts May Fall Short of Market Hopes, Suggesting Economy More Resilient Than Expected
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Markets may be disappointed as rate cuts this year could fall short of expectations, according to Deutsche Bank's George Saravelos.
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Futures markets forecast 5-6 rate cuts this year, lowering over 100 basis points. However, cuts may only go to "nominal neutral" rate.
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Situation is similar to 1995 when markets hoped for 200 basis point cut but only got 75 basis points.
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Technologies like AI could drive new productivity cycle and reduce need for rate cuts, as in mid-1990s.
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January jobs report and continued spending strength suggest economy may be more resilient than feared.