Markets could collapse if the Fed doesn't cut rates soon, and if it doesn't, it could lead to a hard landing in 2025, according to the Fed's top economist

• The absence of interest rate cuts could lead to a hard landing in 2025, Torsten Slok, an economist at Apollo Premier, told Bloomberg Telegraph.

• He expects the stock market to slowly lose momentum, which could result in big losses in a rising interest rate environment.

• Slo reson believes that runaway inflation and economic weakness is the reason why the Fed will not cut interest rates.

The stock market's strength won't last if the Federal Reserve leaves interest rates unchanged, Thorsten Slocum told Bloomberg Telegraph on Tuesday.

If interest rates are not cut this year, the continued "sugar-coating" of the stock market will wear off as the negative baking effects of hawkish policies continue to be felt.

"Highly leveraged consumer balance sheets, highly leveraged corporate balance sheets, as well as banks and regional banks have suffered greatly," Apollo's mat economist said:

As the sugarcoating begins to wear off, if the stock market doesn't continue to rise, this effect will eventually begin to dominate," said the Apollo-based economist. That's probably what we're going to get in 2025, when you're going to end up with the risk of a hotter landing," the Apollo Mat economist said.

Slocum warned that in this environment, the market would be reminiscent of 2022, when stocks were falling and interest rates were rising.

The stock market ended that year in a deep bear market, with the benchmark S&P index falling 18%.

Although Dr. Koon has warned of the risks associated with high interest rates, he believes it is unlikely that the Fed will cut rates, and he was one of the first to suggest that monetary policy will remain unchanged this year. The underlying reasons include the surprising strength of the U.S. economy, as well as the uptick in inflation data in a number of sectors, which he doubled down on in the interview.

At the time of his comments, investors were skeptical about the likelihood of a rate cut in June, which was once considered the most likely month for easing rates. While the market is now pricing in the possibility of a rate cut in September, some are even arguing that a rate hike is possible if the Fed wants to curb inflation. However, the Slough resonance does not agree with this view.

"I think, from a transmission mechanism perspective, they ning to keep rates high for a little bit longer, maybe a quarter or two, and then realize the goal of letting the economy slow down."

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