Trump Win In 2024 Would Lead To 'Stronger Growth And Higher Inflation,' Expert Predicts Fed To Factor In Election Results In Rate Cut Plans

David Zervos, Chief Market Strategist at Jefferies, recently suggested that a Trump victory in the 2024 presidential election could lead to stronger economic growth and higher inflation.

What Happened: Zervos made this prediction on CNBC’s “Last Call” on Monday, indicating that the Federal Reserve might need to reconsider potential rate cuts in light of these possibilities.

“There is a lot to unpack and think about what a Trump win would mean in interest rates versus what a Biden win would mean, how the relationship with a Trump [appointed] treasury and a current Fed would evolve in the first year when J. Powell is still there,” he said.

“If the Fed’s staff were to put in their models a Trump win, they would probably see stronger growth and higher inflation. “They would go to the committee and say… ‘those cuts that we were thinking about… maybe they got to hang out for a little while.”

See Also: Trump Ally Steve Bannon Says Biden Withdrawl Could Upend GOP Campaign, Describes First Debate As ‘Pyrrhic

Why It Matters: Zervos’ comments come in response to the recent speculation about the Fed’s independence, particularly in the context of the upcoming election. In a previous interview, Zervos had expressed concerns about the ability of the Fed’s Chairman, Jerome Powell, to resist political pressures. The U.S. stock market has been on a record run, with some analysts attributing this trend to the increasing likelihood of a Trump victory. The performance of the S&P 500 over the past three months has shown a positive correlation with the odds of Trump returning to the White House.

Meanwhile, Morgan Stanley has predicted that the Federal Reserve and the European Central Bank are expected to cut interest rates in September due to falling inflation.

Neel Kashkari, the President of the Minneapolis Federal Reserve, has also predicted a potential rate cut by the end of 2024.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari