Atlanta Fed President Raphael Bostic has lowered hopes of an interest rate cut in the near term. The central bank policymaker, who is voting on the Federal Open Market Committee’s policy decisions this year, explained that he only expects inflation to fall to the lower twos by the end of 2024. The current inflation rate stands at around 3%.
“With that outlook, I really see the first move coming sometime in the summertime,” Bostic explained. The Fed’s interest rate remains at a 23-year high. Still, the Atlanta Fed President was impressed by the strength of the US labor market, with 353,000 jobs added as reported by January’s monthly jobs report.
Still, despite this positive development, Bostic questions how quickly inflation can fall below 2%, adding that a strong labor market may keep prices elevated. Because low unemployment means that more people have money to spend, businesses feel that they can raise prices.