USANasdaqExchange CEO Adena Friedman warned on Tuesday (16th) that the Federal Reserve should be wary of cutting interest rates prematurely.
Friedman told the World Economic Forum in Davos, Switzerland, that while “there are a lot of signals that the Fed should cut interest rates this year, the question is ‘when are they going to do it?’ If I were one of them, I would be a little worried about starting to get a rate cut.” Too early.’”
She explained that while inflation is moving in the “right direction,” the Fed also expects it to slow, making it more difficult to cut interest rates.
Friedman said the Fed also wants to make sure they believe rates have reached a stable state before starting to make major moves in the area.
The Federal Reserve kept interest rates unchanged for the third consecutive time in December, keeping the federal funds rate range at 5.25%-5.5%. Federal Open Market Committee (FOMC) members predict that three rate cuts are likely in 2024. Previously, between March 2022 and July 2023, the Federal Open Market Committee (FOMC) raised interest rates 11 times in a row in response to rising inflation.
Have more confidence in the market
As markets predict when interest rates may be cut and when the cost of capital may fall, investors can start thinking about how to more successfully model a company’s future earnings, she said.
Additionally, knowing that inflation is falling and business costs are moderating will give businesses more confidence, Friedman said.
“I think all of this is going to increase market confidence, and that will certainly be reflected in market valuations,” Friedman said. “While the market performance was low and then high last year, there is a broader improvement in valuations, including for companies with lower valuations.”
“I think it will also spark interest from investors who want to put their venture capital to work, which means … we can actually get the initial public offering (IPO) market open again,” she said, adding that about 85 companies The IPO market has been opened, applications can be made inNasdaqListed.
2024-01-16 22:20:03
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