Federal Reserve’s Bostic Encouraged by Continued Strong Economic Momentum, Anticipates Rate Cut in Q4

Speaker Predicts Delayed Reach of Inflation Target and Urges Gradual Economic Slowdown

Inflation target is a concern for the speaker, who predicts that it will not be reached until 2026. However, there are some secondary measures in the inflation numbers that indicate a potential slow movement. Despite these concerns, the speaker is not in a rush to disrupt the current economic dynamics as long as inflation is on track to reach its target. Contacts related to employment have not expressed any worries to the speaker, who takes a more hawkish stance.

The speaker points out certain aspects of the inflation numbers that are worrisome, particularly the rising percentage of goods in the CPI basket that are growing at rates above 3% and even 5%. This trend is reminiscent of the high inflation period and needs to be monitored closely to ensure it does not lead to upward pricing pressure before any decisions are made regarding policy rates.

Despite anticipation that the economy may slow down at a quicker rate, the speaker is not seeing any signs of it picking up. Any weakening that may be happening is at a very gradual level. In order for the economy to reach its desired inflation target, it must slow down in the long run. The speaker is contemplating only one interest rate cut this year and closely monitoring the situation to see how things progress. If the economy continues to evolve as expected, he believes it would be appropriate to start cutting rates in the fourth quarter.

Overall, while there are some concerns about inflation and potential slower movement in certain sectors of

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