F&C's Scott claims Fed rate cut smacks of panic

F&C’s Ted Scott has criticised the Fed’s impromptu 0.75% rate cut, claiming it smacks of panic. Th...

F&C’s Ted Scott has criticised the Fed’s impromptu 0.75% rate cut, claiming it smacks of panic.

The respected F&C UK Growth & Income fund manager said the move may provide a fillip to equities and a relief to borrowers.

“However, the move also smacks of panic,” he said.

“Furthermore, the cut suggests that the economy is already in dire straits and paradoxically confirms the markets’ worst fears.

“The Fed has been reactive rather than proactive and the danger is that it is too little, too late.

“For the longer term such a loose monetary policy runs the risk of stocking up inflation which may be why the Fed has been slow to react.

“The worst scenario would be stagflation.”

Scott said the dramatic move by the Federal Reserve has put increased pressure on the MPC to cut rates by more than 25bps when they next meet.

“The reputation of both Central Banks has been tarnished in recent months in my view,” he added.

Meanwhile Royal London economist Ian Kernohan has said the Fed intended to use the element of surprise to boost markets.

“But, there must be some doubt that lower interest rates will work this time,” he said.

“Welcome to the world of cheaper money – again.”