Fed holds rates steady, but September cut now in focus, says expert
MANAMA, 8 days ago
The Federal Reserve held interest rates steady today, but the next step is increasingly clear. A cut is coming in September, and investors should be preparing now, predicts the CEO of one of the world’s largest independent financial organizations.
"The decision to hold was expected, but it doesn’t shift the path. The Fed has likely just bought itself eight more weeks before a pivot," says Nigel Green, CEO of global financial advisory giant deVere Group.
“We now expect that by September, the underlying softness in the economy will make a cut not just justified, but necessary.”
The Fed kept the benchmark rate in its target range of 4.25% to 4.50%, where it has sat since December.
But what was notable this time wasn’t the decision, it was the dissent.
“When key policymakers start breaking ranks, it tells you the consensus is cracking. The economy is changing faster than the narrative.”
The headline GDP figure – 3.0% annualized growth in the second quarter – painted a picture of strength.
However, the internals tell a different story. Imports plunged, flattering the overall print, while core domestic demand slowed sharply.
“The GDP number looked impressive at first glance, but it’s built on a shrinking trade gap. That’s not the foundation of enduring growth. Beneath it, private consumption and business investment are both showing signs of fatigue,” notes Nigel Green.
Consumer spending, while still positive, decelerated from the previous quarter. Americans are becoming more selective, more cautious – a shift that matters for investors trying to assess which parts of the market remain resilient.
“We’re seeing a transition in behavior. People aren’t panicking, but they’re hesitating. They’re thinking harder about how and where to spend. This shift will ripple across sectors, and smart investors will adjust early.”
With inflation continuing to ease, the Fed has room to move – and the broader economic signals are now pointing in the same direction.
“The case for cutting isn’t built on fear, it’s built on realism. Growth isn’t reversing, but it is thinning out. The Fed has always said it’s data-driven, and the data is evolving.”
The deVere Group chief executive believes today’s pause gives investors a crucial window.
“This is the moment to recheck exposure, stress test assumptions, and reweight toward high-quality, globally diversified assets. If you're waiting for the official pivot to reposition, you may already be behind.”
Markets may respond positively in the short term to the Fed’s steady hand, but that optimism could narrow once investors process the nuances of slowing demand and uneven sector performance.
“There’s a difference between momentum and endurance. Right now, we’re seeing the tail end of stimulus-driven resilience, but not a broad-based expansion. Positioning based on the headline alone is a mistake.”
deVere is advising clients to look beyond the binary of rate hikes or cuts, and to focus instead on portfolio durability in a world where growth is steady but no longer abundant.
"It would appear that we’re entering a new phase of lower inflation, lower growth, and soon, lower rates. This rewards forward-thinking strategy over reaction," says Green.
As central bankers weigh the incoming data and investors digest the mixed signals, it seems that September is shaping up to be a decisive month.
"Today’s decision keeps the Fed in wait-and-see mode – but the waiting won’t last much longer. We expect the first cut in September. Now is the time to prepare for it," he adds.-TradeArabia News Service
