Fed may note strong spending, but still has room to choose on how much to cut rates
Scott Helfstein, head of investment strategy at Global X, says the Federal Reserve is likely to take note of the continued strength of the consumer after better-than-expected US retail sales in August. He says: ‘With CPI inflation at 2.5 per cent, 300 basis points in real terms is probably too high, but the Fed does have the freedom of action to cut rates by 25 basis points initially or by a full 50 basis points.’ The key, he said, is for the Fed to start cutting rates by an amount that may have little to do with the economy. Retail sales have grown slightly below the long-term average in recent months, but are still growing at a moderate pace, he said.
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