Federal Reserve's Dilemma: Easing Financial Conditions Make Rate Cuts Difficult, Says Analyst

According to Odaily, despite some Federal Reserve officials attempting to keep the possibility of another rate hike alive, the main message from the Fed seems to be that the next move will be a rate cut. However, Torsten Slok, an analyst at Apollo, suggests in a report that the milder the Fed's tone, the looser the financial conditions become, making it harder for the Fed to cut rates. He refers to this as the 'Federal Reserve's reflexivity paradox of rate cuts.' Slok points out that since the Federal Open Market Committee began discussing rate cuts in November last year, the US stock market has rebounded, and the 'household sector has also received unexpected wealth.' He also notes that government spending has provided a 'significant boost to the economy.'