Atlanta Bostic Federal Reserve President signals caution on rate cuts despite improved inflation data
Date
8/14/2024 8:40:49 AM
(MENAFN) Atlanta Federal Reserve bank President Raphael Bostic expressed increased confidence that the Federal Reserve can achieve its 2 percent inflation target, thanks to recent economic data. However, he indicated that he requires additional data before endorsing a rate cut. Speaking at an event in Atlanta on Tuesday, Bostic noted that while the risks associated with inflation and the labor market are nearly balanced, he is wary of reducing interest rates prematurely. His concern is that an early rate cut could necessitate raising rates again if inflation picks up unexpectedly.
Bostic suggested that if economic conditions evolve as anticipated, interest rates could be lower by the end of the year. Despite this, he emphasized the importance of patience, stating, "I am prepared to wait, but it is coming... it is coming." The financial markets largely expect the Federal Reserve to lower interest rates during its meeting on September 17-18, which would mark the first rate cut since the current monetary tightening cycle began. The Fed started increasing its benchmark overnight lending rate in March 2022, bringing it from near zero to its current range of 5.25 percent to 5.50 percent, a level it has maintained since July 2023.
While inflation has shown some improvement recently, job creation has slowed and the unemployment rate has risen to a post-pandemic high of 4.3 percent as of last month. These mixed signals have led policymakers like Bostic to reassess their expectations regarding the timing of interest rate cuts.
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