Fed says there is no “urgency” to raise rates, but cuts are still far away

There is no urgency for the Federal Reserve re-upload your interest rate official now that the economy is slowing and inflation is falling, but it will probably pass “a long time” before it is appropriate to cut it, the president of the entity in Atlanta, Raphael Bostic, said Tuesday.

“I am in no hurry to raise rates, nor to reduce them,” Bostic said at an event at the Atlanta Chamber of Commerce in which he tried to combine caution about new increases with the commitment that the Federal Open Market Committee has adopted with the strategy of “higher for longer” for this phase of its fight against inflation.

“I don’t think it’s urgent for us to do anything else (…) I want us to wait. I think that’s appropriate for a long time.”Bostic said.

Fed policymakers almost unanimously believe that at most a quarter-point rate increase will be necessary before the central bank completes a cycle of hikes that began in March 2022 to combat a acceleration of inflation in which consumer prices rose at an annual rate of up to 9%.

Bostic is among seven of 19 officials who in September indicated that the Fed could leave the rate at the current range of between 5.25% and 5.5% and still see inflation fall, without putting more pressure on the economy than necessary.

The current rate policy “The economy is starting to slow down. How fast is it going to slow down?”Bostic asked, asking for an approach “patient” for any new policy changes, giving the economy more time to adapt to what the Fed has already done.

“The slowdown is happening. Let it happen. Let’s let the world move and be patient. (Inflation) does not have to be 2% tomorrow”Bostic said.

The Fed will meet from October 31 to November 1. Many investors hope that recent data showing a decline in the underlying pace of inflation will lead the central bank to keep the official benchmark rate stable.

Twelve of 19 officials, however, predicted in September that another rate hike would be necessary, and this week they laid out the reasons why it might be necessary.

Friday’s jobs report will be the next key data point in that debate, and officials will be watching to see whether hiring continues to slow and whether other labor market indicators move more in line with trends seen before the pandemic.

Source: Reuters