George Lagarias, chief economist at Forvis Mazars, has argued for a modest 25 basis point rate cut ahead of the Fed’s upcoming policy meeting.

Lagarias warned against a larger cut of 50 basis points, saying it could send the wrong message to both the market and the broader economy.

“I don’t think there’s any urgency to cut rates by 50 basis points. Anything bigger could signal panic or unnecessary anxiety, and as we know, a recession often becomes a self-fulfilling prophecy,” he said.

While most strategists expected the Fed to settle for a 25 basis point cut, recent economic data has fueled speculation about a more aggressive move. U.S. job openings fell to a three-year low in July, underscoring potential weakness in the labor market. That data has led some market participants to raise their estimates of a 50 basis point rate cut. But Lagarias and other experts argue that such a drastic move is unwarranted.

“There is no doubt that there is a slowdown, but we are far from a recession. The decline in the job market is more about supply growth than demand decline,” Lagarias said. “We expected this slowdown, and it is not a sign of an imminent recession. There is no need for the Fed to be so aggressive right now,” he said, acknowledging that hiring and manufacturing have weakened.

Lagarias is not alone in his cautious stance. Jefferies’ chief European financial economist Mohit Kumar echoed that view in early August, saying there was “absolutely no need” for the Fed to cut rates by 50 basis points at its upcoming meeting.

*This is not investment advice.