Citrini founder: The Federal Reserve will "ignore" oil price shocks, do not give up on rate cut expectations

格隆汇, March 26 ｜ James van Geelen, founder of Citrini Research, who previously shocked the market with his report "2028 Global Intelligence Crisis," has issued a new warning: do not abandon expectations for rate cuts, as surging oil prices are likely to bring new shocks to the economy, enough to prevent the Federal Reserve from raising rates. He believes the market is confusing the current situation with the 2022 oil price shock, making a typical recency bias mistake. In 2022, interest rates were at the zero lower bound and CPI exceeded 5%, leaving the Federal Reserve with no choice but to raise rates sharply. The world we are in now is completely different, with rates close to neutral levels. He stated that if the Iran war is resolved within a month, consumers may be slightly weaker, but concerns about inflation will fade. If the war drags on, stock prices are expected to fall, the wealth effect will make the economic weakness too severe, and the market will no longer be able to accept the expectation that the Federal Reserve will not cut rates in the next 12 months. He said Citrini is buying 3-month SOFR futures contracts and shorting US stocks as a hedge.