(CoinUnited.io) — ”’Market Confidence Overshadows Powell’s PrudenceAccording to Krishna Guha, vice chair of Evercore ISI, the central bank’s projection of three rate cuts in the coming year largely overshadowed Powell’s attempts to convey a sense of sensibility and caution with regards to the economic outlook. This sentiment was echoed by Stephen Stanley, chief U.S. economist at Santander, who observed that the market interpreted the three-cut forecast as a confirmation of the Fed’s dovish stance.Possible Risks of Market-Driven ApproachExperts like Jose Torres, a senior economist at Interactive Brokers, warn that the increased confidence among market participants is likely to result in looser financial conditions. This, in turn, may lead to a resurgence of inflation. Stanley remains skeptical of the Fed’s optimistic economic scenario, which projects a 1.4% annual growth rate with minimal changes in unemployment as sufficient to achieve 2% inflation by next year.Debate Over Reduction of Interest RatesRobert Brusca, president of FAO Economics, expressed doubt about the Fed’s ability to curb inflation while simultaneously reducing interest rates, especially when the unemployment rate is at a nearly 50-year low.Market Response and SpeculationEconomists note that financial conditions have already improved by the equivalent of two 25-basis-point rate cuts since Powell’s press conference. Despite this, Stanley believes that the Fed’s overall shift may not be as significant as the market perceives it to be. Diane Swonk, chief economist at KPMG, suggests that the Fed’s recent efforts to prevent a recession are driven by the desire to maintain progress in inflation control.”’
