Market Instability to Continue Amid Economic Slowdown, Says Intercapital Markets Executive Director
The recent increase in interest rates by the U.S. Federal Reserve is aimed at slowing down the economy to help reduce inflation. However, the question of whether a recession can be avoided remains a lengthy economic debate. This was highlighted by Nikolay Meister, the Executive Director of Intercapital Markets, during an appearance on Bloomberg TV Bulgaria’s program “Business Start.”
According to Meister, the current composition of the Federal Reserve will find it challenging to achieve a delicate balancing of interest rates that could combat inflation without triggering a recession.
“If economic data indicates a need to lower interest rates, the Fed will not hesitate to do so, even if it may not look favorable in the period just before the U.S. presidential elections,” he added. Meister pointed out that decisions in U.S. presidential elections are often made at least three months in advance when voters form their opinions, suggesting that the Fed is unlikely to be overly concerned about the election date.
Meister noted that volatility in the capital markets, which has been evident since the beginning of the year, is expected to persist. “Markets have transitioned from expecting that there would be no recession in the U.S. at all, to anticipating a soft landing, and now to concerns about a severe recession, alongside market declines observed in early August. This volatility is characteristic of a period marked by changes in the global economic landscape,” he commented during the program.
He pointed out that after approximately 15 years of low interest rates, low inflation, and inflation stimulation, we are likely entering a phase of economic slowdown as the battle against inflation continues. “It is difficult to predict the nature of this slowdown, when it will occur, or how severe it will be, but it will certainly lead to continued market instability,” Meister stated.
Over the past year, the technology giants of the “Magnificent Seven” have led market growth and profits. Currently, discussions are emerging about a “spillover” of this trend, as a broader range of companies begin to report good earnings, Meister added.
Furthermore, geopolitical tensions in the Middle East have had minimal impact on the markets, which is evident even in oil prices. The primary focus remains on the U.S. economy, followed by the European economy, Meister concluded.
Stay Updated with the Latest News
Every piece of news is a valuable asset. Keep an eye on Investor.bg and Google News Showcase for the latest updates.
