Market debate on Fed's first interest rate cut grows

The debate over the timing of the Fed’s rate cut in the US is intensifying day by day. Investors interpreted the strong growth data released in the US on Thursday as a development that supports not rushing to cut interest rates but waiting until September. Following former New York Fed President William Dudley’s call for the US central bank to cut interest rates at next week’s meeting, discussions have begun on when the easing should begin. Former Pimco CEO and Bloomberg Opinion columnist Mohamed El-Erian also warned that delaying rate cuts for too long could be a “policy mistake.” However, investors interpreted the above-expectation US growth data released on Thursday as a development that supports waiting until September. Swap dealers are pricing in a cut of around 64 basis points in the US this year. Gabriela Santos, chief strategist for the Americas at JPMorgan Asset Management, told Bloomberg TV, “I don’t think it’s urgent to cut interest rates too aggressively. Yes, it’s important to normalize interest rates without delay. But I don’t think ‘without delay’ means next week. However, the possibility of September is still on the table after yesterday's data," he said.