Steve Eisman says the Fed shouldn't cut rates, risks creating a stock market bubble if it does

Eisman said the central bank would be better off just staying put as the economy shows continuing signs of strength and inflation eases.

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If the Federal Reserve follows through on plans to lower interest rates it could lead to a stock market bubble, in the view of Neuberger Berman portfolio manager Steve Eisman. The central bank last month penciled in three potential quarter percentage point rate cuts by the end of 2023, along with multiple other cuts coming in future years. But Eisman, whose bets against the housing market were profiled in "The Big Short" movie and book, said the central bank would be better off just staying put as the economy shows continuing signs of strength and inflation eases.

"My view is the economy is fine. I personally think there should be no Fed cuts this year," he said during an interview on CNBC's " Squawk Box ." "Why would you cut? My actual fear is that if the Fed were actually to cut rates, the market becomes bubblicious and then we have a real problem.



So, you know, things are good. The Fed should do nothing and then wait for the data to get weak." Markets in fact have grown nervous this week as hopes have waned for rate cuts.

In an interview Friday, Fed Chair Jerome Powell reiterated that a strong economy and moderating inflation will allow central bankers to be patient in easing monetary policy. A report Monday from the Institute for Supply Management showed the manufacturing sector expanding after 16 straight contractions. However, the report also indicated a growing number of firms showing price increases.

The Fed's preferred inflation indicator showed a 12-month rate of 2..