Is the Fed 'sleepwalking into a policy mistake?': Abrdn analyst calls for faster easing of rates

While British money manager abdrn predicts that the U.S. system volition spot a brushed landing, determination is inactive the hazard of a prolonged slowdown successful 2025, said Kenneth Akintewe, the company's caput of Asian sovereign debt.

Speaking to CNBC's "Squawk Box Asia" connected Monday, Akintewe asked the question: "Is the Fed already sleepwalking into a argumentation mistake?"

He pointed to economical information similar non-farm payrolls, saying they were aboriginal revised to bespeak a weaker economical picture. In August, the U.S. Labor Department reported that the U.S. system created 818,000 less jobs than primitively reported from April 2023 to March 2024.

As portion of its preliminary annual benchmark revisions to the nonfarm payroll numbers, the Bureau of Labor Statistics said the existent occupation maturation was astir 30% little than the initially reported 2.9 cardinal from April 2023 done March of this year.

Akintewe said: "Is the system already weaker than the header information suggests and [the Fed] should already beryllium easing?"

He added that argumentation changes by the Fed takes clip to determination done the economy, "so if the system is weaker than the header information suggests, they volition request to accumulate [a] capable magnitude of easing, you know, 150, 200, ground points, that volition instrumentality time."

"And erstwhile you've done that magnitude of easing, it takes six to 8 months to transmit that." A spokesperson for the U.S. cardinal slope declined to remark erstwhile contacted by CNBC.

If the system abruptly shows signs of much weakness astatine the commencement of 2025, Akintewe said it volition instrumentality until the 2nd fractional of 2025 to spot the effects of immoderate easing transmitted done the economy, which could look "quite different" by that time.

He besides argued that the marketplace is excessively focused connected forecasting the size of immoderate imaginable upcoming cut, asking. "The different question nary 1 seems to inquire is, wherefore is the argumentation complaint inactive astatine 5.5% erstwhile ostentation is down [to] astir 2.5%? Like, bash you request a 300 ground constituent existent argumentation complaint successful this benignant of situation with each the uncertainty that we're facing?"

In the U.S. connected Friday, information showed the idiosyncratic depletion expenditures (PCE) terms index, the Federal Reserve's favored measurement of inflation, ticked up 0.2% past month, arsenic expected.

The information seems to backmost a smaller complaint cut, with U.S. complaint futures suggesting a lesser accidental of a 50 basis-point complaint chopped aboriginal successful September.

Currently, markets spot an astir 70% accidental of a 25-basis-point chopped astatine the Fed's gathering this month, with the remaining 30% expecting the Fed to slash rates by 50 ground points, according to the CME Fedwatch Tool.

— CNBC's Jeff Cox contributed to this report.