Federal Reserve chair Jerome Powell has indicated that the central bank is unlikely to cut interest rates in March. Despite this, stock market bulls are not concerned about the change in rate cut expectations. This is mainly due to Powell’s comments regarding strong economic data. Powell mentioned that a strong labor market and economic growth are no longer main concerns for the Fed in terms of rate cuts. Instead, good economic news is viewed as positive for the stock market as it indicates increasing business activity, which is generally favorable for investors. Goldman Sachs equity strategist Ben Snider stated that the timing of the rate cut is not as crucial as the fact that the Fed is encouraging investors to move out of cash and reducing the cost of capital environment for small businesses. The market’s interest rate projections for the next few years have remained consistent, indicating that the bull case for stocks remains intact, as the Fed is likely to cut rates due to falling inflation, rather than due to signs of weakness in the economy.
