Four Federal Reserve officials signaled Wednesday that they do not believe a rate cut is urgently needed, and policy makers have made it clear in recent days that a rate cut likely won't happen until May at the earliest. added to the list of people.
Adriana Kugler, Boston Fed President Susan Collins, Minneapolis Fed President Neel Kashkari, and Richmond's Thomas Barkin all agree that despite a notable improvement in inflation last year, the U.S. central bank will not be able to meet the Fed's standards. Neither gave any commitments on whether they would be able to begin lowering lending rates from 20-year highs. Year.
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The remarks largely echo the message Fed Chairman Jerome Powell has issued over the past week, saying that until policymakers are confident that inflation is heading toward the Fed's 2% goal, The Fed stressed that it is not ready to start cutting rates and that the rate cuts are aimed at the Fed's 2% target. A meeting on March 19-20 is unlikely.
Investors are shedding bets on a rate cut in March and are focusing on the Fed's subsequent decision on May 1, but they still see it unlikely to happen any time soon.
In his first public appearance since taking over the Fed in September, Kugler said he was optimistic that inflationary progress would continue, but he did not say when the agency could reduce borrowing costs.
“As inflation and the labor market continue to cool, it may be appropriate at some point to lower the target range for the federal funds rate,” Kugler said at the Brookings Institution in Washington. It added that it would closely monitor the data. That inflation continues to decline.
Mr Collins, who will not vote on monetary policy this year, is looking for further evidence that inflation is on track for 2% before cutting interest rates, which could happen “later this year”. said that it was high.
“Signs of sustained and growing progress will give us the confidence we need to begin making systematic adjustments to our policy stance,” Collins told the Boston Economic Club. He added that it would be appropriate to begin mitigation policies by the end of the year.
In an interview on CNBC on Wednesday morning, Kashkari, who is also unopposed this year, said officials want to see “a few more months” of inflation data before cutting rates, adding that two or three rate cuts could be expected in 2024. He added that he believed it was likely to be appropriate.
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“We're not asking for better inflation data, we're just asking for additional inflation data at the same 2% level,” the Minneapolis mayor said. “I think seeing that data for a few more months will give us a lot of confidence.”
On January 31, the Federal Reserve's policy-making committee unanimously voted to keep the target federal funds rate unchanged at 5.25% to 5.5%. Authorities have kept interest rates at what they describe as restrictive levels since July 2023. Still, the economy grew at an annualized rate of 3.3% in the fourth quarter and added 353,000 jobs in January, both significantly higher than expected.
This remarkable resilience has some policymakers wary that cutting rates too soon could cause demand to accelerate again and keep inflation above the 2% target. Their preferred price index rose 2.6% in 2023, down from a high of 7.1% in mid-2022.
“I'm a huge proponent of being patient to get where you need to get,” Barkin said Wednesday at an Economic Club event in Washington, D.C. “For now, I see the trade-offs, which are beginning to balance out, as still favoring continued anti-inflation measures.”
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