• Thu. Apr 18th, 2024

Atlanta Fed Bank President Forecasts Gradual Slowdown, Single Rate Cut for 2019

BySamantha Jones

Apr 3, 2024
Cutting Rates in Q4 Given Expected Economic Evolution

Atlanta Federal Reserve Bank President Raphael Bostic has forecast that the US central bank will lower its policy rate just once this year, in an interview with CNBC on Wednesday. He believes that despite maintaining strong momentum, the economy may experience some incremental weakening, and that it needs to slow down in order to reach its longer-run potential.

Bostic emphasized the need for patience as inflation is likely to decrease at a slower rate than expected. He 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. Bostic projects that inflation will decrease gradually 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. He did mention that any degradation in employment would need to be taken into consideration. However, he stated that 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.

By Samantha Jones

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