By coinnews 
00:00 Speaker A
JP Morgan CEO Jamie Diamond warned that the US economy may fall into stagflation as a result of high deficits, policy pressure, and geopolitical uncertainty in an interview with Bloomberg. In appearances this week, Fed officials stressed the need for more hard data before reducing rates downplaying the likelihood of a June or July rate cut. Our next guest says the Fed should lower policy this summer to preserve US expansion. Here to explain, we’ve got Simona Mokuda, who is the State Street Global Advisors Chief Economist. So, take us into your your thinking around why they should look at June or July and what that overall sets them up for for the totality of cuts that you’re anticipating this year.
01:39 Simona Mocuta
Sure. I have to say there is very much a sense of uh deja vu. I I we made the same argument last summer, um, and the Fed, of course, was reluctant to follow through with the summer cuts, and then they came back in September with a larger move. I feel, uh, there’s a decent chance we might be going into a similar scenario this year. And the reason I do think the Fed should cut this by tariffs is that the labor market and the economy as overall, I would argue, is at a much more delicate, uh, point today than a year ago. Um, the labor market is in balance, but labor demand continues to weaken. So I think the pressures from here on are towards more softness, not drastic deterioration, but there is more stuff that’s already baked into the pie so to speak, with some of the, um, but, um, dodge moves, uh, that may not hit payrolls data until later in the fall with some of the funding cuts that you know will have repercussions, but you may not yet see them in payrolls. So all eyes right now are on the inflation side of the Fed mandate. I’m a little bit more about the labor part, and that is the critical element in the economy because the economy avoids recession if consumer spending remains strong, and that can only happen if the labor market remains strong. So it’s an argument of managing both risks and and perhaps accepting that whatever hit from tariffs we may have on inflation, which again, the the picture is changing every every week, and we don’t know that, but the more steady trend of softening in the labor market is the one that should be paid more attention to.