The President of the Federal Reserve Bank of Atlanta, Raphael Bostic, said that it would probably be advisable for the United States financial regulator to lower interest rates in the fourth quarter of the current year.
The head of the mentioned bank explained his point of view by the unstable nature of inflation. Raphael Bostic believes that the most constructive strategy for the Federal Reserve’s actions in the context of monetary policy changes this year should be only one lowering in interest rates. At the same time, he noted that the current condition of the United States economic system can be described as strong. Moreover, Raphael Bostic drew attention to the slowdown in the process of reducing inflation in the country.
It is worth noting that in the current year, the President of the Federal Reserve Bank of Atlanta is a member of the Fed’s policy-setting committee, who has the right to vote.
During a conversation with media representatives, Raphael Bostic, who is involved in decision-making on the concept of the United States financial regulator, said that, in his opinion, it is most appropriate to start lowering interest rates in the fourth quarter of 2024. He also noted that in case of negative changes in the inflation dynamic, it will have to show more patience than many expected.
It is worth noting that a kind of common position has been formed among Fed officials that in 2024 the financial regulator will lower interest rates three times. This scenario of actions was considered as the most rational and constructive in the context of economic reality. Over time, the relevant point of view has narrowed in some ways in terms of the scale of support. Media reports indicate that nine out of 19 Fed officials currently expect two or one interest rate cut this year.
At the March meeting, the financial regulator of the United States kept the indicator of the cost of borrowing at a level corresponding to more than a twenty-year high.
Raphael Bostic says that inflation has not shown significant changes in the US dynamic lately. He also expressed his concern about some secondary measures in the price figures. Separately, Raphael Bostic noted that his contacts do not complain about serious problems in the sphere of employment. In this context, he noted that a negative change in the state of affairs in the labor market could be a factor impacting his point of view on the expediency of only one lowering in interest rates this year. According to him, the deterioration of the employment situation will be taken into account as part of the formation of the policy concept of the central bank of the United States.
The media reports expectations that the US government’s monthly jobs report, which will be published later this week, will show that employers have created 214,000 in March. Economists predict a decline in the unemployment rate to 3.8%, which is a historically low level.
Also this week, two Fed officials who vote on monetary policy decisions in the current year said they still expect the United States financial regulator to cut interest rates three times by the end of 2024. At the same time, these persons are convinced that in the context of the implementation of appropriate measures, one should be careful and not rush.
San Francisco Fed President Mary Daly said three interest rate cuts are a reasonable expectation. At the same time, she noted that there is currently no need for urgent adjustments. In her opinion, the three lowerings in the cost of borrowing can be described as a very reasonable baseline. The corresponding statement was made at an event in Nevada. Mary Daly also said that the growth of the United States economy continues at a high pace. According to her, against the background of this dynamic, there is no need for an urgent adjustment of interest rates.
The president of the Cleveland Fed, Loretta Mester, during a conversation with media representatives, said that she continues to perceive as appropriate the strategy of the financial regulator, which provides for lowering the cost of borrowing this year three times. In this context, it was also noted that it’s a close call on whether fewer will be needed. Loretta Mester also talks about the need for additional evidence that inflation is on a steady decline trajectory before starting to lower interest rates.
The President of the Cleveland Fed recognizes the fact that the final decision on monetary easing depends on the state of affairs in the economic system of the United States and the vector of development of the situation. According to her, the inflation data obtained at the beginning of 2024 indicate that the process of reducing this indicator has stalled. At the same time, she did not rule out the possibility that the growth in the cost of goods and services will eventually return to a downward trajectory.
Loretta Mester says that the inflation figures since the beginning of the current year have turned out to be higher than the preliminary expectations for the dynamic of this indicator. At the same time, she is convinced that the growth in the cost of goods and services will continue to slow down to the Fed’s target of 2%, but the corresponding process will be carried out at a slower pace than in 2023.
As we have reported earlier, Jerome Powell Says Fed Needs More Confidence on Inflation to Cut Rates.
