Federal Reserve Bank of Atlanta President Raphael Bostic said he wants to see more evidence inflation is on track toward the central bank’s 2% target, repeating that he doesn’t expect policymakers to cut interest rates until the third quarter.
“My outlook right now is for our first cut to be sometime in the third quarter this year and we’ll just have to see how the data progress,” Bostic said in remarks to the Metro Atlanta Chamber’s board of directors on Thursday.
Bostic, who votes on monetary policy decisions this year, suggested he would be open to moving earlier if inflation falls “well faster” than he expects. But he reiterated that he’s still looking for “more evidence that we’re staying on that trajectory to that 2% target.”
The worst outcome, he added, would be for policymakers to lower rates and have to raise them again later if inflation moves higher.
“I’m expecting it’s going to be bumpy and because of that bumpiness I feel like we’ve got to be careful,” he said. “We do not want to go on these up and down or a back and forth pattern.”
“I want us to be absolutely certain that inflation is where we need it to be before we move too dramatically,” he added.
The Federal Open Market Committee is expected to leave its benchmark interest rate unchanged for a fourth straight meeting when policymakers gather Jan. 30-31. Bostic’s comments are among the last by Fed officials before the committee goes into a self-imposed communications blackout ahead of the gathering.
Policymakers’ quarterly projections from December implied three interest-rate cuts in 2024 — or some 75 basis points of cuts – and Fed officials have pushed back against market expectations of imminent and deep rate reductions this year. Odds of a March cut have notably eased since Governor Christopher Waller said earlier this week that policy moves should be “carefully calibrated and not rushed.”
Bostic, who was seen as among the more dovish Fed officials last year, has also repeatedly called for higher-for-longer tightening to ensure inflation returns to the committee’s 2% target.
The economy is tracking to grow at a solid annualized rate of 2.4% in the fourth quarter, according to the Atlanta Fed’s latest estimate. While that would be a moderation from the blockbuster 4.9% pace seen in the third quarter, a resilient consumer continues to power the economy forward.
The Fed’s preferred gauge of inflation has fallen sharply over the past year. Excluding the volatile food and energy categories, the core metric rose 1.9% in November on a six-month annualized basis — just below the Fed’s 2% target.
This article was provided by Bloomberg News.