Source: Bloomberg
Author: Alex Harris, Steve Matthews, Craig Torres
Three Federal Reserve officials said that the pace of interest rate cuts depends on the upcoming economic data, which indicates that the path to reducing the cost of lending may be different from the previous interest rate cut.
Boston Fed Chief Susan Collins and the New York Federal Reserve Governor John Williams all said that the Federal Reserve's first interest rate reduction at "later this year" may be appropriate.Atlanta Federal Reserve President Raphael Bostic said he is currently considering a certain time at some time this summer.However, policy makers also provide some insights on how the Fed will evaluate future interest rate cuts.
"In terms of interest rate cuts and pace, we must be driven by economic conditions and inflation." Williams told reporters on Wednesday, and added that in the past, officials had entered the conventional model.The fixed timetable, but focuses on data. "
Policy makers have repeatedly expressed that they hope to see more evidence that shows more inflation to the decline before cutting interest rates, especially considering that consumer price data released earlier this month is higher than expected.However, these comments show that officials will rely on economic data to promote interest rate cuts.
"We always say that we will rely on data," Bostic said on Wednesday, "these data will be used as a guide, telling us that the extent, speed or timing of the policy should be adjusted."
In the past, the Federal Reserve generally lowered interest rates, usually to cope with economic recession.But this time, the fundamental fundamentals seem different.
Despite the rise in borrowing costs, consumers are still continuing to spend, and the unemployment rate has maintained at a historical lowest level of 3.7%, which is almost the same as the Federal Reserve ’s interest rate hike in March 2022.
Although several decision makers, including Bostic, are expected to continue to fall to 2%of the Fed's target, they do expect that this road will be full of bumps.A Federal Reserve's favored price indicator will be released on Thursday, and officials will get the latest data on inflation.
"I still see signs that this will not be a process that can reach 2%quickly," Bostic said. "As long as we can achieve our goals and do not see bad things, I am willing to stay patient."
Policy path
The Federal Reserve's next meeting will be held from March 19th to 20th. It is expected that the benchmark loan interest rate will remain unchanged at 5.25%to 5.5%.The futures market has digested the expectations of interest rate cuts in June, but the possibility of reducing interest rates next month is almost zero.Fed officials are expected to cut interest rates three times in 2024 in the dotted drawing in December, each at a rate of 25 basis points.Williams claims that this estimate is still the "reasonable starting point" of interest rate cuts this year.
"Starting to relax the policy later this year may be a suitable move," Collins said on Wednesday. "When this happens, the systemic and forward -looking interest rate reduction method should provide the flexibility required for management risks. At the same time, at the same timePromote the stability and employment of price. "
Collins also said that further deceleration of inflation may require further economic activities.
"However, there is a considerable uncertainty at the time and degree of the potential slowing down of economic activities," he said, pointed out that the employment growth in January was strong, and the number of consumer price indexes "high" in the month of the month.
