Federal Reserves Bostic Forecasts Two Rate Cuts and a Soft Landing Next Year – The News Teller
Title: Atlanta Fed President Projects Possible Interest Rate Reductions by 2024
Atlanta Federal Reserve President, Raphael Bostic, announced on Tuesday that the US central bank could initiate interest rate cuts in the third quarter of 2024. Bostic’s predictions are contingent upon the anticipated decrease in inflation rates.
Bostic believes that a year-end inflation rate of roughly 2.4% would warrant two quarter-percentage-point rate cuts during the latter half of next year. However, he emphasized the need for policymakers to wait and analyze additional data for several months to ensure that inflation remains on a downward trajectory before implementing any changes. The current policy rate range of 5.25%-5.50% will be maintained until sufficient confidence is gained.
Eager to establish guidelines to determine when rate cuts would be necessary, Bostic has directed his staff to initiate discussions around principles and thresholds. His remarks provide further clarity on the Federal Reserve’s recent policy shift.
Bostic’s cautiously optimistic approach has resonated with investors, who have responded positively to the dovish tone adopted by Fed Chair Jerome Powell. Consequently, expectations have risen regarding the central bank’s intention to initiate interest rate reductions as early as March.
However, Bostic has urged against prematurely lowering borrowing costs until inflation is adequately contained. He remains committed to monitoring economic indicators closely to ensure stability in both prices and employment rates. While Bostic’s forecast of two 25-basis-point rate cuts is more conservative than that of his colleagues, he recognizes the importance of remaining receptive to potential policy adjustments.
Looking ahead, Bostic anticipates a 4% unemployment rate by the end of 2024. He is keenly attuned to any signs necessitating alternative policy measures. Nonetheless, he cautioned against hasty conclusions, emphasizing that the Federal Reserve still has work to do to achieve its targets.
With Bostic’s projections, the future of the US central bank’s interest rates remains uncertain. As time progresses, policymakers will eagerly await further data to guide their decision-making process.
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