The Fed’s Raphael Bostic does not expect interest rate cuts before “end of 2024.”

  • Atlanta Federal Reserve President Raphael Bostic said Friday that he does not anticipate cutting interest rates earlier than 2024.
  • “We’re going to have to be cautious, we’re going to have to be patient, but we’re also going to have to be decisive,” he told CNBC.

Atlanta Federal Reserve President Raphael Bostic said Friday that he does not anticipate cutting interest rates earlier than 2024.

While he cited progress on inflation and an economic slowdown, a central bank official told CNBC there is still a long way to go before the Fed reaches its 2% annual inflation target.

“I would say late 2024.” – Bostic replied when asked about the time frame in which the first reduction could occur.

Since March 2022, the Fed has raised its key interest rate 11 times, by a total of 5.25 percentage points. While Bostic said he saw no possibility of easing monetary policy anytime soon, he was clear in his insistence that interest rates had reached a “sufficiently restrictive” level at which they no longer needed to be raised.

He warned, however, that the road to returning to an acceptable level of inflation may be long.

“The economy continues to show great dynamics. “My forecast is that inflation will come down, but it won’t feel like falling off a cliff,” Bostic said in an interview on “Squawk Box.” “It will be the kind of progress that will take time. So we have to be careful, we have to be patient, but also decisive.”

Bostic is not a voting member of the rate-setting Federal Open Market Committee this year, but will get a vote in 2024.

He said he didn’t expect “we will cut interest rates until the middle of next year at the earliest.”

“I’m really trying to get people to focus on inflation, which is still 3.7%. Our goal is 2,” he said. “It’s not the same and we need to get much closer to 2% before we consider… any kind of relaxation of our stance.”

Following comments from multiple Fed speakers in recent days, including Chairman Jerome Powell on Thursday, market prices have eliminated any chance of an interest rate increase at the next FOMC meeting on October 31-November. 1. The probability of an increase in December is just 25%, according to CME Group’s FedWatch tool, which measures prices in the federal funds futures market.

Markets expect two or three quarter-point cuts by the end of 2024.

One reason the Fed might consider easing interest rates would be if economic growth slows or goes into recession. While Bostic said he doesn’t see a recession coming, he does see conditions changing. He added that business contacts told him they were preparing for a slowdown.

“We won’t experience a recession, I don’t think we will,” he said. “We will see a slowdown and inflation will drop to 2%.”

Bostic spoke out after significant movements in financial markets, especially in treasury bond yields. After breaching the psychologically important 5% level earlier in the session, the benchmark 10-year Treasury yield has eased slightly, recently trading at around 4.97%.

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