Atlanta Federal Reserve Bank President Raphael Bostic Predicts Single Rate Cut this Year and Emphasizes Importance of Watching Economic Conditions

Cutting Rates in Q4 Could Be Appropriate if Economy Follows Expected Evolution

Atlanta Federal Reserve Bank President Raphael Bostic recently stated that he predicts the US central bank will lower the policy rate only once this year. In an interview with CNBC, Bostic emphasized that the economy is maintaining its strong momentum and any weakening is happening at a very incremental level. He believes that over the longer arc, the economy needs to slow down to reach its full potential, but growth and inflation can still be achieved.

Bostic revised his forecast to include one rate cut this year and expressed the importance of watching and waiting to see how things unfold. If the economy evolves as he expects, it would be appropriate to cut rates in the fourth quarter of this year. Bostic predicts that inflation will gradually decrease through 2024 and does not anticipate reaching the 2% inflation target until 2026.

In terms of market reaction, the US Dollar Index did not show an immediate response to Bostic’s comments and was slightly down by 0.04% on the day at 104.70. Despite this, Bostic emphasized that he is not looking to disrupt the economy’s dynamics unless there are signs of degradation in employment. However, his contacts have not raised any concerns regarding employment at this time.

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