Fed official: Rate cut likely in Q4

Federal Reserve President Raphael Bostic expects to begin lowering interest rates later in 2024, stating that inflation doesn’t have to fall all the way to 2% for him to favor a cut.

Bostic is currently monitoring progress toward the annual target of lowering interest rates, and sees plausible scenarios in which more cuts, no cuts, or even a rate hike could be appropriate.

In 2023, the inflation rate fell by more than half, from above 5% to below 3%, per the personal consumption expenditures (PCE) price index. However, this progress slowed considerably early this year, and Bostic believes that inflation has resumed its decline.

He cited April and May inflation reports as “glimmers” of evidence that price changes are moving towards the Fed’s 2% goal and sees risks to the labour market and inflation becoming more balanced in recent weeks.