Stifel's chief economist, Lindsey Piegza, has criticized the Federal Reserve's most recent 50 basis point interest rate cut, suggesting it gave markets "the wrong message." Piegza said in an interview with Bloomberg that the cut was too drastic and was a rushed move to boost the economy instead of a deliberate effort to steady the ship
Piegza stressed that potentially a smaller drop would have underscored a cautious attitude as the markets stabilize, "A 25 basis point cut would have been more appropriate." She voiced worry that the Fed is turning its focus away from inflation, even as important inflation gauges like the core personal consumption expenditures (PCE) index have surged and now show 2.68% in August from 2.65% in July.
Piegza cautioned if inflation stays above the 2% target, the Fed's early emphasis on labor market weakness may leave the American economy susceptible to stagflation. She declared, "The biggest risk for the U.S. economy is not a downturn but a period of stagflation." Moreover, she also talked about outside factors influencing inflation, such as the rising energy prices and expansionary fiscal policies.
