Federal Reserve Bank of Atlanta President Raphael Bostic talks about year-over-year inflation rates on “The Craman Countdown.”
Atlanta Federal Reserve Fed Governor Raphael Bostic told FOX Business’ Liz Claman on Thursday that the central bank is unlikely to cut interest rates in July amid signs that inflation is slowing.
Asked whether there was a scenario in which the Fed would begin easing interest rates as soon as July, Bostic said, “We’re watching the near-term trajectory, and if that trajectory continues to move forward, I think we’ll be in a good position. I don’t see that happening in July.”
He said he would like to see economic data that shows the economy is “robust enough” and inflation is approaching the Fed’s 2 percent target before supporting a rate cut, but noted “that’s not my outlook today.”
Federal Reserve meeting minutes show “willingness” to raise interest rates again
Still, Bostic, who has a voting role on the 12-member Federal Open Market Committee this year, said he is not going to wait until inflation falls to 2 percent before starting to ease monetary policy.
Raphael Bostic, President and CEO of the Federal Reserve Bank of Atlanta, speaks at the National Association of Business Economics (NABE) Economic Policy Conference in Washington, DC on March 21, 2022. (Photographer: Valerie Plesch/Bloomberg via Getty Images/Getty Images)
“That would actually push inflation up too much, which is not ideal,” he said. Bostic expects inflation to fall “very slowly” over the course of this year, eventually settling around 2% in 2025 or beyond.
The authorities voted At its last meeting in May, the Fed decided to keep interest rates on hold at a range of 5.25 percent to 5.5 percent, the highest level since 2001. In a statement after the meeting, policymakers left the door open to a rate cut this year but stressed they needed “further confidence” that inflation was falling before easing policy.
Inflation rises to 3.4% in April as prices remain high
Since then, there has been some evidence that inflation is starting to ease again, albeit slowly: The April Consumer Price Index showed inflation fell slightly to 3.4% from 3.5% the previous month, easing investor concerns that prices may be rising again.
The Marriner S. Eccles Federal Reserve Building in Washington, D.C., Wednesday, July 6, 2022. The Fed is expected to release details of what policymakers discussed last month, which could shed light on how they see the near-term path for interest rates. (Photographer: Al Drago/Bloomberg via Getty Images/Getty Images)
But minutes of the meeting made public last week showed officials were prepared to keep rates high for an extended period after a series of policy changes. Disappointing inflation figures It is prepared to raise prices again if necessary in the first three months of the year.
“Participants noted the disappointing inflation reading in the first quarter and indications of strong economic momentum, and assessed that it will take longer than previously expected to gain confidence that inflation is moving sustainably towards 2 percent,” the minutes said.
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Bostic said Thursday that the Fed does not plan to raise rates again this year unless there is evidence that pricing pressures are building again in the economy.
“I’ve said publicly for over a year now, ‘I don’t think it’s necessary to get to our 2 percent target,'” he said. “I still believe that. But we have to allow for the possibility that a rate hike would be appropriate if inflation were to move in the opposite direction and pricing power were to start accelerating again. And I don’t see that happening at this point.”
