Economist: Stock market doesn't need rate cuts to keep setting records

• TS Lombard's top U.S. economist tells CNBC that the stock market doesn't need to cut rates to keep setting records.

• "With an inflation rate of 3.5% to 4% and a real growth rate of 2.5%, a funds rate of 5.5% is fine," he said.

• Even if the rate cuts this year are due to economic weakness, the idea of 'bleeding' the economy will help stocks rebound," he said.

Some market scholars have suggested that interest rates may not be cut at all this year. While some worry that the stock market will lose an important catalyst, one expert sees no reason to worry.

TS Lombard, the premier U.S. economist, believes that the market will be able to get out of the no rate cuts. Traders have significantly scaled back their expectations for rate cuts compared to the beginning of the year, when some traders predicted an aggregate of seven rate cuts.

"What's actually happening right now is a change of heart," Steven Blitz said in an interview with CNBC on Thursday.

"He added: "With inflation ranging from 3.5% to 4% and real growth of 2.5%, a funds rate of 5.5% would be acceptable." They've already told you that they won't raise rates to shorten the time it takes to get to 2%, so if you're the market, you're just going to say 'okay then'.

Recently, inflation has been on the rise, causing investors to wonder if the economy is cooling off. The Federal Reserve's preferred inflation gauge, the PCE index, showed a rebound in the latest data released on Friday after four months of declines. However, markets were closed for the day.

Previously, where the Fed began to cut interest rates, the stock market usually fell into a decline, this is because the rate cuts usually occurred in the case of economic recession. But Blitz said that even if this year's rate cuts occur in a weak economy, the idea of the Fed stepping in to bail out the market - the so-called "Fed put" - will help stocks rebound.

"[The Fed] is on the side of the market," Blitz said." If the market weakens, they cut rates. If it doesn't weaken, they'll keep the status quo. So for the market ...... it's a little bit like being bearish on the economy, and I think it's right for the market to bounce back because of that.

In essence, Blitz believes that the case for the market to continue to rebound is intact, regardless of the outcome.

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