After the Federal Reserve announced that will be keeping the federal funds rate at 2.25 to 2.50 percent at the beginning of May, Jeffrey Taylor, co-founder and managing director of Digital Risk, said on CNBC’s Squawk Box [1] that he predicts the Fed to cut rates based on geopolitical issues.
“If you were to ask me three months ago, if there was a chance we would be having rate cuts this year in the U.S., I would say absolutely not,” said Taylor. “Now, if you look at the situation, it’s somewhat unprecedented, but you’re looking at probably at least 50 basis points, 100 basis points rate cuts based on geopolitical issues, versus the strong economy the U.S. has right now with wage growth at the fastest its been in over a decade for the middle class and unemployment around 4%.”
One thing Taylor is keeping an eye on this year is the housing market, noting that mortgage rates are the lowest they’ve been in months.
“All of a sudden, with mortgage rates down the affordability factor is going to kick in,” Taylor said. “The move-up on homebuyer or the first-time homebuyer may finally be able to get into the market. I think they’re a lot of positives happening in the housing market.”
Given the positive indicators in the economy, the rate cut seems more likeley than ever, Taylor notes.
“I would have never predicted this six months ago, but that looks to be the reality we’re in right now,” Taylor continues.