Fed’s bigger worry may be recession, not inflation: Strategist

Many on Wall Street have their focus set on the Federal Reserve, watching for any further clues as to when it will cut interest rates. Some are questioning how many rate cuts there will be, but should the focus be more on when they will start cutting? Kevin Mahn, Chief Investment Officer at Hennion & Walsh, joins Yahoo Finance to give insight into what could happen if the Fed continues its policy of higher for longer interest rates for longer than most expect them to. Mahn explains that before the Fed cuts interest rates, they need to see "two consecutive quarters of a slowing economy before they can feel good about actually cutting interest rates." When asked about where to see that slow down, Mahn says: "If you look at the GDP now estimate, the recent from the Atlanta Fed, they're forecasting fourth quarter GDP to slow to 2.4%. Still good growth, but much lower than third quarter 5.3%. Then looking at the Fed's own projections for GDP, 1.4% this year and staying below 2% all the way through the end of 2026. If that is, in fact, true, that is an economic slowdown. How does that economic slowdown actually turn to a period of economic growth? The Fed starts cutting interest rates, providing, of course, that inflation continues to moderate." For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live. Editor's note: This article was written by Nicholas Jacobino