The big interview: CEO says the Fed debate is missing what matters most for brokers
“My gut feel is you probably get one hike here to calm the markets a little bit,” he said. “If you look at it right now with the Fed doing nothing, you’re just seeing rates drifting higher. One hike. Say, ‘Yeah, we’re paying attention to inflation, get that under control.’ Once that gets under control, then it gives Warsh a path.”
Steffa said Warsh’s credibility is another factor, with the White House publicly pushing for lower rates and the new chair needing to demonstrate independence.
“It gives him a little credibility that he’s not governed by Trump,” he said. “Trump’s in his ear, saying ‘I want lower rates to solve this housing affordability problem.’ And it gives Warsh a path. Because Warsh is by nature a dove and he would like to cut rates, but he can’t do that immediately given where inflation’s been running.”
However, Steffa doesn’t believe that a small hike or cut is going to change the math on the current equity market.
“I don’t really care if rates go up or down 25 or 50 basis points,” he said. “If the 10-year Treasury was 4.5% and 30-year mortgages were 6.5%, if they went down 25, there’s still so much of that trapped home equity in those lower coupons. If they went up 25 or 50, so be it, no big deal.”
