Bostic Confirms Possibility of Rate Cuts This Year, but Stresses Inflation Target

According to Atlanta Federal Reserve President Raphael Bostic, the US central bank is likely to proceed with cutting interest rates this year, although the exact timing and degree of the policy adjustment remain uncertain. Bostic, who is a voting member of the Federal Open Market Committee (FOMC), expressed optimism about the prospect of easing monetary policy, citing signs of forthcoming wage and job growth slowdowns, as well as decreasing pricing power among businesses in his district. He explained that while the pace of price increases appeared to stagnate above the Federal Reserve’s 2% goal in the initial quarter, he nevertheless maintains faith that interest rates could still be reduced this year. However, Bostic cautioned that such a step would only occur after sufficient evidence of inflation returning to the FOMC’s objective of 2%, which he predicts will take some time. Consequently, Bostic stated that for the time being, the Fed’s priority is to exercise patience and delay the first rate reduction until enough indicators suggest that inflation is moving closer to the desired level. Several Fed officials and investors have delayed predictions for rate cuts this year, shifting them from March to September. The Fed’s June 11-12 gathering is scheduled to provide updated projections for the economy and interest rates. Bostic also predicted that monthly job gains in the “low” hundred thousand range would be compatible with a constant unemployment rate at a point in late 2025 or early 2026, when inflation would have returned to the Fed’s target. Despite a 1.6% contraction in GDP in the first quarter, most Fed officials have disregarded it as not indicative of the economy’s underlying strength.