- "Shark Tank" star Kevin O'Leary sees zero rate cuts this year, he told Fox Business.
- "I'm investing under the premise that we're going to be living with this rate cycle staying the same."
- Cuts are unlikely as the Fed can't seem to reach its mandate of 2% inflation anytime soon, he said.
Investors need to stifle any hope for interest rate cuts this year, as the Federal Reserve will not be able to reach its inflation mandate anytime soon, Kevin O'Leary said.
The "Shark Tank" star told Fox Business Network that monetary policy will instead remain unchanged, and that anyone still betting on a dovish pivot is mistaken.
Backing him up on Wednesday was the Fed itself, which announced at the conclusion of its latest policy meeting that it would leave the federal funds rate at its current target range of 525-550 basis points.
"They keep pushing out their optimism month after month. But there'll be no rate cuts this year," O'Leary said Tuesday. "I'm investing under the premise that we're going to be living with this rate cycle staying the same for the rest of the year. I'm sorry, it's just reality."
His take adds to a growing chorus of commentators that have grown convinced in a zero-cut scenario, as a string of hot economic data keeps spoiling market forecasts: where once cuts were expected as soon as March, strong labor, economic, and inflation readings have progressively moved this outlook to the end of the year.
And in late April, the Fed's ability to cut at all came into question by a wider swath of analysts, as first-quarter GDP slowed considerably from previous readings. With inflation still rising, that brought up concern of stagflation, a scenario smothered only by rate hikes.
"The Fed's mandate is 2% inflation — not two, not three, not 3.2 — It's two, and so inflation is not going down anywhere near two for a bunch of reasons, and, therefore, they will not cut rates," O'Leary said.
For its part, the Fed has projected three rate cuts in 2024, though officials have repeatedly asserted that this depends on future inflation and economic data.
Meanwhile, some on Wall Street have also pointed out that the Fed may feel disinclined from pursuing rate cuts, as the impact of higher borrowing costs hasn't yet broken much in the economy.
Still, shifting forecasts have weighed heavily on stocks, with April becoming 2024's first losing month for the market.