Thorsten Slok, chief economist at Apollo Global Management, argued in an assessment on CNBC’s “Power Lunch” that the Fed should not cut interest rates at its scheduled meeting next week.
Mr. Slok said current economic data and market conditions indicate the maintenance of tight monetary policy.
Although there is concern in the market that the credit cycle could deteriorate, the data suggests otherwise, Slok said. “If you look at high-yield bond and loan default rates, they’ve been going down for the last six months, so we’re not at the beginning of a credit cycle,” Slok said.
Throck stressed that the labor market remains resilient, with claims for unemployment benefits at very low levels and Indeed data showing job openings on the rise. Slok said the slowdown in labor force growth was due to lower immigration rates, not a lack of demand, and noted that inflation remained pegged at 3%.
“We expect inflation to remain around 3% over the next 12 months. The Fed’s target is 2%, and it would be inappropriate to cut interest rates when inflation is this persistent.”
*This is not investment advice.
