- Atlanta Fed President Raphael Bostic told CNN he expects the first interest rate cuts in the summer.
- He said he expects the US inflation rate to fall to “the lower twos” only by end-2024.
- The US economy has been robust — which drives spending and inflation.
Sick of dealing with a sky-high mortgage and soaring credit card interest?
Well, you may have to wait until summer for things to improve.
On Monday, Raphael Bostic, the president of the Atlanta Fed, told CNN he’s expecting the US inflation rate to fall to “the lower twos” by the end of this year — down from 3.4% in December.
“With that outlook, I really see the first move coming sometime in the summertime,” he told CNN.
The Fed has hiked interest rates multiple times since March 2022 to tame high inflation and cool the red-hot US economy as pandemic restrictions loosened. Higher interest rates dampen demand for investment and spending, but they also make debt — including mortgages and credit card interest — more expensive.
Bostic said he’s hurting from the high prices, too. After all, Fed officials “live the economy too,” he told the CNN.
“I have to go to the grocery store like everybody else. I buy gas like everybody else,” Bostic said. “We are not in an ivory tower abstractly thinking about things.”
But, for interest rates to come down, data has to show inflation has cooled decidedly, he told CNN.
The US economy has been robust, with job growth beating forecasts in January and fourth-quarter GDP growth well above expectations — which drives spending and inflation.
“The question is sort of what is the underlying implication for how fast inflation can get back to 2%?” Bostic told CNN, referring to the Fed’s inflation target.
In December, the Fed signaled three interest rate cuts in 2024, sending economists and analysts worldwide on a guessing when the first cut will happen.
Earlier this month, several banks — include ing Goldman Sachs and Bank of America — said they expected cuts to happen as soon as March, Bloomberg reported.
Fed Chair Jerome Powell said earlier this month that interest rate cuts were unlikely to start in March, pouring cold water on some expectations of a sooner-rather-than-later rate cut.
The market is now watching for US January inflation data, due on Tuesday morning, for further cues.
The Federal Reserve Open Market Committee’s next meeting is scheduled over two days from March 19.
