The Fed’s rate-cut projections are pointing to an imminent recession, economist says

Top economist David Rosenberg believes that the Federal Reserve’s interest rate forecasts are indicating an impending recession. Despite the Fed’s optimistic outlook on GDP growth and unemployment, Rosenberg sees officials’ prediction of a significant drop in the median federal funds rate as a recession indicator. He points out that historically, the Fed has only reduced rates by 75 basis points during economic slowdowns, except for one instance in the 1980s.
The Fed’s shift towards recession-combating measures has led stock investors to anticipate rate cuts, but Rosenberg warns that in recessions, interest rates, bond yields, and equity prices tend to decrease together. Additionally, he cautions investors about the risks in the leveraged loan market, which has seen increasing defaults as economic downturns approach.