Fed could deliver surprise 50 bps cut amid weak jobs data: Steve Englander – News Air Insight

The recently concluded BRICS summit has reignited debate over the bloc’s long-term relevance, with White House trade adviser Peter Navarro dismissing the alliance as “not here to stay.” Speaking to ET Now, Steve Englander, Head of North America Macro Strategy at Standard Chartered, offered a nuanced perspective on BRICS, global money flows, and the looming Federal Reserve decision.

On BRICS and Navarro’s comments

Englander noted that Navarro’s bluntness stood out even in Washington, where candid commentary is common.

“Well, even in an administration where people are pretty uninhibited about their commentary, Navarro stands out for his lack of inhibitions. There is some substance there—the BRICS are a very diverse set of countries, geographically, politically, and economically,” he said.

While a common BRICS currency remains “very far in the distance,” Englander pointed out that their unity lies in their shared perception of U.S. policy as a threat. “If you talk about a common BRICS currency, that is somewhere very far in the distance, there is nothing immediate… On the other hand, they are united because they see U.S. policy shifts as a threat, and that is pushing them together. You never know what might emerge,” he added.

On Global Money Flows and the Dollar

Turning to financial markets, Englander described the U.S. economy as operating like a giant hedge fund.“That is the big question. If you look at the U.S. as a global hedge fund, it runs a significant current account deficit. It borrows cheaply and invests in risky assets, technology, new innovations, and so on,” he said.The sustainability of this model, according to him, depends on whether emerging technologies—such as stablecoins and AI—deliver. “If that works out, there is no reason the model should fall apart. It has supported the dollar through capital inflows into the U.S.,” he explained.

But the risks are clear. “If that turns out to be premature, or if it does not happen, the dollar could be in trouble because the big ratios—net international debt, net government debt—are already at high levels and continuing to rise,” Englander warned.

On CPI, Fed Cuts, and Market Expectations

With U.S. Consumer Price Index (CPI) data and a key Federal Reserve meeting approaching, Englander urged investors to watch carefully for inflationary pressures beyond tariffs. “If it becomes clear that inflation is not just about tariffs, but we also see firming in core services, that would impact Fed behavior,” he said.

Still, he expects the Fed to act aggressively. “We think the labour market is weak enough that the Fed will cut by 50 basis points. You have about 27,000 or 28,000 payrolls a month on average over the last four months—well below anyone’s estimate of long-term potential. So, we may see a catch-up cut: 25 based on current conditions and 25 based on what we would have done had we known, in real time, just how weak things were,” he explained.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)