Economist El-Erian: Markets exaggerate the extent of the Fed's rate cut

Traders currently expect the Federal Reserve to cut interest rates by 100 basis points by the end of the year. Economist Mohamed El-Erian stated that they are exaggerating the possibility of a significant rate cut by the Fed before the end of the year: "In my opinion, the market has already digested so many rate cuts, which is problematic." In recent days, traders have strengthened their bets in the swap market that the Fed will cut rates by up to 100 basis points before the end of the year, with a possible 25 or even 50 basis point cut in September. The minutes of the Fed's July meeting showed that some officials believed that a rate cut next month was possible, and the latest employment data showed that job growth was not as strong as previously reported, further indicating that a rate cut is almost a certainty. According to El-Erian, the Fed will cut rates by 75 basis points before the end of the year. He said: "There is a view that we need to reconcile the hard landing policy with the soft landing policy. The market will eventually adjust."