Federal Reserve officials warn of interest rate cuts amid inflation concerns

2/25/2024 2:46:10 AM

(MENAFN) Two officials from the US Federal Reserve have expressed their stance on the matter, indicating that they prefer to have greater confidence in the easing of inflationary pressures before contemplating any potential interest rate reductions this year.

"I would like to have greater confidence that inflation is converging to 2 percent before beginning to cut the policy rate," Governor Lisa D. Cook made remarks during her speech at Princeton University's School of Public and International Affairs in New Jersey on Thursday.

During the Federal Open Market Committee (FOMC) meeting in July, Governor Lisa D. Cook noted that the risk of inflation persisting above 3 percent for an extended period was "quite salient," she stated. "Since then, inflation has fallen more quickly than anticipated, and the risk of persistently high inflation, though it has not disappeared, appears to have diminished."

"At some point, as we gain greater confidence that disinflation is ongoing and sustainable, that changing outlook will warrant a change in the policy rate," she further mentioned.

Fed Vice Chair Philip Jefferson stated that the Federal Reserve's "strong actions" have effectively pushed its policy rate into restrictive territory. He also emphasized that the restrictive stance of monetary policy is exerting downward pressure on both economic activity and inflation.

"If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back our policy restraint later this year," he made these remarks during a presentation at the Peterson Institute for International Economics in Washington, D.C. on Thursday.

However, Jefferson highlighted three risks that could impact the economic outlook and the Federal Open Market Committee's (FOMC) forecast.

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