2024-04-19 10:38:00
Investing.com – Monetary policymakers agree on keeping monetary levels at current levels perhaps well into the year, given slow progress in inflation and an economy American still strong.
On Thursday, Atlanta Fed President Rafael Bostic became the latest U.S. regulator to adopt the “no rush” principle in cutting interest rates. Speaking in Fort Lauderdale, Florida, Bostic took the “end of the year” view on the likely timing of the first rate cut, saying: “I consider it necessary to ‘be patient “.
At a later event in Coral Gables, Fla., Bostic said that if “inflation begins to move away from our target in the opposite direction, I don’t think we’ll have any choice but to move there.” answer “. Adding: “I have to be open to an increase in interest rates. » He does not believe it is appropriate to reduce borrowing costs before the end of the year.
The president of the Federal Reserve Bank of Atlanta previously said he planned to cut interest rates only once this year.
Traders now see only one or two rate cuts this year. That’s a far cry from the six they expected at the start of 2024 and the three Fed officials were expecting just a month ago.
Read also:
Fed members change their tune
On Thursday, New York Fed President John Williams also embraced the “no rush” principle of cutting interest rates, a view expressed by Fed Governor Christopher Waller in February and reiterated since by many of his colleagues.
Williams told the Semaphore World Economic Summit in Washington: “I certainly don’t feel the need to lower interest rates” given the strength of the economy. “I think ultimately … interest rates will have to come down at some point, but the timing of that depends on the economy.”
فيما قالت لوريتا ميستر، رئيسة بنك الاحتياطي الفيدرالي في كليفلاند، في تصريحات لها في وقت متأخر من يوم الأربعاء، إن بنك الاحتياطي الي من المرجح أن يخفض أسعار الفائدة “في مرحلة ما” لاحقة “هذا العام” التي استخدمتها هي وويليامز Before.
Minneapolis Fed President Neel Kashkari told Fox News he also wants to be “patient” because the first rate cut likely won’t be appropriate until next year.
A few weeks ago, many policymakers indicated that they expected inflation to slow in the face of tight monetary policy from the Federal Reserve, which would require several interest rate cuts before the end of the year to prevent monetary policy from slowing down the economy too much.
But strong job growth, a third straight month of surprise inflation-driven gains in March and strong retail spending, among other recent economic indicators, have convinced members of the U.S. Federal Reserve that interest rate cuts will have to wait.
Earlier this week, Fed Vice Chairman Philip Jefferson removed any reference to the appropriate timing of interest rate cuts, and Fed Chairman Jerome Powell said it would likely take more time to gain enough confidence in falling inflation to reduce borrowing costs.
In the words of San Francisco Federal Reserve President Mary Daly, “the worst thing you can do is act urgently when urgency is not necessary.”
Read also:
Markets react to Fed statements
As the rhetoric of Fed members evolved, financial markets also priced in smaller, later rate cuts. Futures tied to the Fed interest rate now reflect expectations that the first cut would come in September, compared to June just a few weeks ago. While the chances of a second interest rate cut by the end of the year have fallen to around 50-50, based…
Inflation by the Fed’s preferred measure, the personal consumption expenditures price index, was 2.5% in February, and Fed policymakers say they expect the March figure for Core personal consumption expenditures – a measure of the direction of inflation – are higher than that. The Federal Reserve is targeting an inflation rate of 2%.
This raises the question of whether the Fed will need to raise interest rates once more to ensure price pressures ease. Williams said it seemed unlikely, but noted it was impossible to rule it out.
Fed policymakers are scheduled to meet April 30 through May 1 and are expected to keep interest rates in the 5.25% to 5.5% range, where they have been since last July.
1713530561
#Fed #members #change #statements #interest #rates.. #rule #increasing
