- Michelle Bowman doesn’t expect the Fed to cut interest rates in 2024.
- Bowman thinks the Fed cutting interest rates in 2024 will be “inappropriate.”
- The Governor urged the Fed to proceed “carefully and deliberately” with its 2% inflation goal.
According to reports, Federal Reserve Governor Michelle Bowman said she doesn’t expect the Fed to cut interest rates in 2024. Bowman cited persistent inflation in the first several months of the year as the main reason she does not see cutting interest rates as an appropriate move by America’s apex bank.
Bowman’s comments came during an interview after her speech to bankers at a recent event in Texas, where she urged the central bank to proceed “carefully and deliberately” as policymakers move toward the Fed’s 2% inflation goal.
Meanwhile, Atlanta Fed President Raphael Bostic believes the Fed could still cut rates before the end of 2024. Despite his belief, he remained uncertain when and by how much the Fed would implement the policy easing. Bostic was also unsure about how inflation would decline in the future.
Bostic highlighted that most firms think that pricing power is at or near its limit and that wage growth is returning to its pre-pandemic levels. He also thinks optimistic disinflation will continue, even though the Fed may not achieve its target of 2% inflation until next year or early 2026.
Furthermore, Bostic focused on getting the timing right with easing rather than the extent of potential rate cuts this year. The banking chief further noted that job growth needs to slow to be consistent with the Fed’s 2% inflation goal, even though it may not lead to unemployment spikes.
Amid the banking chiefs’ outlook, signals from the FOMC suggest an impending delay in the easing of monetary policy due to disappointing first-quarter inflation data. According to Fed Chairman Jerome Powell, the policymaker does not expect it would be appropriate to reduce the target range for the federal funds rate until it has gained greater confidence that inflation is moving sustainably toward 2%.
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