On Friday (October 20th) local time, Atlanta Fed Chairman Bostick stated that he expects the Fed to cut interest rates only later next year.
Bostek said in a media interview on Friday that the Federal Reserve still has a lot of work to do before achieving the 2% inflation target.
Since March last year, the Federal Reserve has raised interest rates 11 times, with a cumulative increase of 525 basis points. The federal funds rate has been raised to a 22-year high of 5.25% -5.5%.
When asked about the timeframe for the first rate cut by the Federal Reserve, Bostick replied, "I would say later in 2024
Bostek stated that he believes policymakers will not relax policies soon, but interest rates have already reached sufficiently strict levels and there is no need to raise them again.
However, Bostek warns that bringing inflation back to an acceptable level may be a long road ahead. He said, "There is still a lot of momentum in the economy. I think inflation will decrease, but it will not plummet like a cliff. This will be a process that will take some time. Therefore, we must be cautious and patient, but we must be resolute
Bostek is not a voting member of the Federal Open Market Committee (FOMC) this year, but will receive voting rights next year.
Bostek predicts that the Federal Reserve will not cut interest rates before the middle of next year. He said, "I do try to get people to pay attention to the inflation rate. Currently, the inflation rate is still 3.7%, and our goal is 2%. They are different. We must be closer to 2% before we can consider any form of relaxation
Central bank officials, including Federal Reserve Chairman Powell, have recently issued a series of speeches, most of which have expressed their readiness to keep interest rates unchanged at the next interest rate meeting. Market pricing shows that investors believe the possibility of the Federal Reserve raising interest rates at the next interest rate meeting has disappeared, and the likelihood of a rate hike in December is only 25%.
The market expects the Federal Reserve to cut interest rates two to three times by the end of 2024, with a rate reduction of 25 basis points. One reason the Federal Reserve may consider turning is a slowdown or even recession in economic growth.
Bostek stated that he does not expect an economic recession in the future, but the situation is indeed changing. He revealed that business people told themselves that they were preparing for an economic recession.
We will not see an economic recession, which is not within my expectations. We will see an economic slowdown and inflation will decrease to 2%, "Bostick said