The Senior Economist at Allianz Muhammad Al -Arian said that the federal reserve is behind the curve to reduce prices now after the economy slows down, just as it was a delay in long -distance hiking rates when inflation was escalating.
the The latest job report He revealed that the American economy added only 22,000 jobs in August with reviews to the previous months that show June, which has already witnessed a decrease. Meanwhile, the unemployment rate increased to the highest level in four years of 4.3 %.
“I think they made a mistake,” He told cnbc Friday. “I think again they are late. They will reduce in September, and I think there will also be a discussion if it is reduced by 25 or 50.”
This would represent another political error in recent years. When the economy began to recover from the Covid-19s, the prices began to rise, but the federal reserve was slow to high rates. When she recently started in 2022, she launched the most aggressive tightening cycle in four decades, although the economy did not lead to recession as expected widely.
Al -Aryan’s statements resonated with President Donald Trump’s criticism of the Central Bank. Trump has insulted President Jerome Powell regularly, and even playing fire earlier this year. Meanwhile, he moved to Fire Free Fed Lisa Cook, who is fighting her dismissal in court.
Al -Arian said that the Federal Reserve should reduce prices in July, but Powell’s view of the labor market was very narrow and ignored the weakness that was built under the surface.
He explained that the danger while waiting for support for the weakness of the labor market is that it can deteriorate in a “non -linear” way, which means that job losses can accelerate quickly.
For his part, Powell pointed to the unemployment rate, which was relatively fixed for more than a year, noting that the offer of workers in the labor market has decreased along with low demand.
Trump’s immigration campaign has sent more than a million workforce workers this year. As a result, the level of job gains required to maintain unemployment is less flat than it was.
At the same time, the dual price mandate for the price stability in the Federal Reserve and the maximum employment force politics to balance the risk of inflation, which was climbing with Trump’s tariff through the supply chain.
Definitions are also weighing in the labor market. in Note on SaturdayTorsten SlØk, Apollo Global Management, note that job growth in sectors suffering from customs tariffs is negative, while sectors that are not directly affected by tariffs are decreasing but are still in a positive area.
EL Erian said there is still time to correct his mistake, and perhaps reduce prices more. But the risk of economics is high because low -income families have witnessed a decrease in their financial security.
“Can they play catching up with a knee?
Also, it is not certain that the Federal Reserve can save the economy. Mark Zandy, the chief analytical economist in Moody, warned that with the continued high inflation, the Central Bank will be Difficulty coming to rescue With a sharp relief cycle.
Likewise, David Kelly, head of asset management at JPMorgan, said that the price cuts will reduce interest revenues for retirees and encourage companies to keep money borrowing and wait for prices until they decrease.
“The history of the twenty -first century is price discounts that do not stimulate growth,” it is Tell CNBC on Friday. “They did not in any way after the great financial crisis. So do not look at the federal reserve to save the economy.”
Moreover, low cuts can also raise fears that the reason that the Federal Reserve is cut off because it sees stagnation on the horizon, as Kelly added.
He explained that the recession fears have been reached in addition to the current uncertainty about the Trump tariff and the suppression of immigration, and could be another withdrawal on the economy, noting that “the largest tax that the government misses is the tax of uncertainty.”
Kelly said: “There is a level of uncertainty here that causes people to freeze, and this is what you really see in employment numbers.” “This is the problem. Companies do not get rid of thousands and thousands. They are only waiting for it, and the three most deadly words in the economy are” waiting and seeing “. But when everyone decides to wait and see, what you see is not good.”
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