Based on the article by Michael S. Derby published on Mitrade titled “Fed’s Bostic says still sees one rate cut this year, with no hurry to ease,” here is a comprehensive 1,000-word rewritten version of the original story.
Title: Fed’s Bostic Maintains Outlook for One Rate Cut in 2024, Citing Cautious Timing
Federal Reserve Bank of Atlanta President Raphael Bostic has reaffirmed his outlook that the central bank will likely implement one interest rate cut before the end of 2024. Speaking publicly on Tuesday, Bostic emphasized that while he continues to anticipate reduced borrowing costs at some point this year, he feels no rush to introduce looser monetary policy, owing to lingering inflationary pressures.
Key Takeaways:
– Bostic maintains his December projection of a single rate cut in 2024.
– He underscores the need for inflation to sustainably approach the Fed’s 2% goal.
– Mixed signals from recent data contribute to a cautious stance.
– The central banker reveals he considered adjusting his forecast but chose consistency.
– He believes monetary policy is “appropriately restrictive” for current economic conditions.
– Bostic indicates his outlook hinges on continued moderation in core inflation.
– No interest in adjusting the Fed’s numeric inflation target at present, emphasizing longer-term goals.
– He sees the US economy as resilient, with strong employment and consumption metrics.
Approaching the Rate Cut Cautiously
In his remarks at a moderated discussion hosted by the Bipartisan Policy Center in Washington, D.C., Bostic pointed out that his perspective on monetary easing has not changed since late last year. He noted that inflation is decelerating from previously heightened levels but still remains above the Federal Reserve’s objective. This has led him to envision just one rate reduction for 2024, likely occurring later in the year, contingent on further cooling of inflation data.
“I still have one cut in my outlook,” Bostic remarked. “My forecast has not changed since December.”
He did disclose that he gave thought to modifying his outlook upward in response to continuously solid economic indicators but ultimately chose to remain aligned with his original projection. This consistency, he said, provides clarity to markets and reinforces the Fed’s commitment to a data-dependent, but stable, approach to monetary policy.
No Rush to Loosen Policy
Despite expectations that rates will ultimately decline, Bostic sent a signal that policymakers should not be in a hurry to shift the current policy stance.
“I’m not in a mad dash to get there right now,” said Bostic. He emphasized that while the Federal Reserve’s key rate remains elevated—currently set in the target range of 5.25% to 5.50%—the data has yet to provide the evidence he needs to justify faster easing.
Concerns about lingering upward pressures on prices, particularly among services and non-energy consumer goods, underlie his hesitancy. As of the latest figures, core inflation remains stubborn, and Bostic wants to see continued evidence of softening before recommending any adjustments.
“Today’s data have not produced that for me,” he said.
Tug of War Between Growth and Inflation
The U.S. economy has displayed resilience in recent months, complicating the Federal Reserve’s rate-cut calculus. Although inflation readings have moderated from their 2022 peaks, progress toward the Fed’s 2% target is proving gradual. Meanwhile, indicators such as GDP growth, job creation, and consumer spending have remained robust.
This economic strength, while reassuring in regard to recession fears, also raises concerns about the potential for inflation to reaccelerate. In That context, Bostic cautioned that the Fed needs to be mindful of how rate policy interacts with the broader economy.
“We still must get inflation back to our target,” he said. “We are not at the place yet where we can declare victory, even though inflation has come down.”
Fed’s Next Steps Depend on Data
Bostic made clear that his support for even
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