Atlanta Fed chief hints at potential interest rate cut this year amid economic uncertainties

President of the Federal Reserve Bank of Atlanta Raphael Bostic said an interest rate cut by the U.S. central bank is likely this year, although the timing and extent of such a move remains unclear.

What happened: Bostic, in a recent interview with Reuters, said that despite a first quarter where inflation appeared to be above the Fed’s 2% target, he still saw room for a rate cut. here the year.

He also said discussions with businesses in his Southeast Fed district suggest a likely deceleration in wage and employment growth. Many businesses reportedly feel their ability to control prices is diminishing following rapid price increases that have driven inflation to a 40-year high in 2022.

Despite weaker-than-expected U.S. job growth in April, Bostic remains optimistic about further progress on inflation throughout the year, paving the way for possible easing of monetary policy in the Fed. However, he expects this process to be gradual.

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Why is this important: This follows the chairman of the Federal Reserve Jerome PowellThe cautious approach to monetary policy suggests that interest rates may remain stable for longer than expected.

With inflation expected to return to 2% by the end of 2025 or early 2026, Bostic’s remarks suggest a cautious strategy to avoid a sharp rise in unemployment. This comes as the Fed’s preferred measure of inflation, the personal consumption expenditures price index, rose at an annual rate of 2.7% in March. Additionally, the investment strategist Ed Yardeni He warned that the Fed’s potential monetary easing through interest rate cuts could trigger a stock market rally.

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