Stocks (^DJI, ^IXIC, ^GSPC) are declining following the August Consumer Price Index (CPI) report, which met expectations but dampened hopes for aggressive interest rate cuts. This data suggests the Federal Reserve is more likely to implement a 25-basis-point cut rather than the 50-basis-point reduction investors were looking for.

Shark Investments managing director Eric Lynch joins Wealth to share his outlook on the Fed's rate-cutting cycle.

Lynch points out that most investors have grown accustomed to low interest rates, unlike the current environment. "There was a pretty good hope that the Fed could cut 50 basis points next week," he explains. However, with services inflation remaining high and core CPI still elevated, Lynch notes, "The Fed can't cut with impunity," leaving many investors disappointed.

"I think the Fed has already outlined since Jackson Hole that they've gotten decidedly less hawkish on CPI or inflation. In today's print, even though core services remain kind of sticky, core CPI remains sticky and that's a negative for drastic reduction in rates," Lynch tells Yahoo Finance, adding that the key question now is: "What's the economy going to do? Are we really going to have a soft landing right now? We're still doing alright."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith