© Reuters. FILE PHOTO: President and chief executive officer of the Federal Reserve Bank of Atlanta, Raphael Bostic speaks at the South African Reserve Bank’s Biennial Conference in the Cape Town International Convention Centre, South Africa, August 31, 2023. REUTER
ATLANTA (Reuters) -Atlanta Federal Reserve Bank President Raphael Bostic said on Friday he now expects just a single quarter-point interest rate cut this year instead of the two he had projected, citing persistent inflation and stronger-than-anticipated economic data.
“I’m definitely less confident than I was in December” that inflation will continue to fall towards the Fed’s 2% target, Bostic told reporters after a forum. Price pressure concerns led him to scale back this year’s rate-cut outlook and push back the likely start date, he added.
Bostic had previously said rate reductions might start as soon as this summer. The Fed is widely expected to reduce rates beginning in June.
Bostic said the economy has proved more resilient than anticipated, with recent data causing him to roughly double his 2024 U.S. economic growth estimate to 2%. He saw little or no change in the current 3.9% unemployment rate, a level considered inflationary not too long go, he added.
While he feels inflation is on an “arc” lower, it may be moving slower, and he cited concern about the number of items still recording outsized price increases.
The balance of risks has shifted towards waiting longer before easing monetary policy, said Bostic, a voter this year on the U.S. central bank’s interest rate policy and its first official to speak publicly since the Federal Open Market Committee meeting ended on Wednesday.
The Fed held rates steady in the 5.25% to 5.5% range at the meeting, with most policymakers still expecting at least three rate cuts this year, but its new projections reflected slower progress on inflation and continued economic strength.
“If we have an economy that is growing above potential, and we have an economy where unemployment is at levels that were deemed to be unimaginable without pricing pressures, and if we have an economy where inflation is moderating … those are good things,” Bostic said. “That gives us space for patience.”
