Cutting Rates in Q4 Given Expected Economic Evolution

Atlanta Federal Reserve Bank President Forecasts Slower Growth and One Rate Cut This Year: A Cautious Approach to Monetary Policy

Atlanta Federal Reserve Bank President Raphael Bostic has forecasted that the US central bank will lower the policy rate only once this year in an interview with CNBC on Wednesday. He noted that while the economy is still growing, it may experience some slowdown.

Bostic believes that the economy needs to slow down to reach its full potential, but he expects growth and inflation to continue at a slower pace than anticipated. He emphasized the need for the Fed to be patient and adjust its forecast accordingly.

Inflation is likely to decrease at a slower rate than expected, and Bostic adjusted his forecast to include only one rate cut this year, with a potential cut in the fourth quarter if the economy evolves as he expects. He projects that inflation will gradually decrease through 2024 and may not reach the 2% target until 2026.

Despite potential bumps in the road ahead, Bostic is not eager to disrupt the economy’s dynamics as long as inflation is moving towards the target rate. However, he stated that any degradation in employment would need to be taken into consideration. But according to him, his contacts have not expressed concerns about employment.

The market did not show an immediate reaction to Bostic’s comments, with the US Dollar Index losing only 0.04% on the day at 104.70. Overall, Bostic’s cautious outlook and forecast for a single rate cut this year suggest a measured approach to monetary policy in response to the changing economic landscape.

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