The Federal Reserve must pivot swiftly to lower interest rates, argues deVere Group CEO Nigel Green, as February’s softer U.S. inflation data provides policymakers a critical window to avert economic turbulence.
The Consumer Price Index (CPI) eased to 2.8% annually, down from January’s 3%, while monthly gains slowed sharply to 0.2%—a shift Green calls a “clear signal” for the Fed to act before stagnation risks intensify.
“This isn’t just about inflation—it’s about threading a needle between cooling price pressures and a faltering growth engine,” Green said, noting mixed signals in the economy. While services sector costs show signs of moderation, wage growth remains stubbornly elevated at 4.3% year-over-year, and inflation expectations have crept higher. Add to this former President Donald Trump’s renewed tariff threats, which Green warns could reignite trade wars, squeeze consumer budgets, and stifle output. “The Fed faces a perilous balancing act: premature easing risks rekindling inflation, but delayed cuts risk tipping the economy into contraction,” he added.
Green’s call for urgency reflects mounting Wall Street scrutiny over the Fed’s “higher for longer” stance. Markets now price in a 68% chance of a June rate cut, per CME FedWatch, but Green argues incrementalism could backfire. “Powell has the cover he needs. The data shows inflation is retreating, job growth is moderating, and manufacturing PMIs are flashing amber. Waiting for perfection might mean waiting too long,” he said, advocating for a “well-telegraphed” cutting cycle to stabilize expectations and buffer against shocks.
For investors, the stakes are high. Sectors like tech and housing—sensitive to borrowing costs—could rally on rate cuts, while longer-duration bonds may rebound as yields retreat. A weaker dollar, pressured by narrowing U.S.-global rate differentials, could lift emerging market equities and commodities, though oil faces volatility from both demand uncertainty and geopolitical tensions. “The Fed’s next move isn’t just about economics—it’s about market psychology,” Green noted. “Early movers will capitalize on shifting dynamics; laggards risk getting caught in the crosscurrents.”
Yet critics caution that core inflation remains above the Fed’s 2% target, and resilient consumer spending complicates the dovish narrative. Green, however, dismisses this as “rearview mirror analysis,” stressing that forward-looking indicators—from sliding small-business confidence to rising corporate defaults—demand preemptive action. “The Fed’s mandate isn’t to fight yesterday’s inflation,” he said. “It’s to prevent tomorrow’s recession.”
As policymakers weigh their options, Green’s message is unequivocal: “The window to cut without panic is closing. Stability now hinges on the Fed leading, not lagging, the curve.”
