Inflation in the United States “appears to be declining” and that should allow the Federal Reserve to cut its benchmark interest rate later this year, Atlanta Fed President Raphael Bostic said in a published monetary policy text. Thursday.
Amid concerns that inflation may be stagnating at elevated levels, Bostic said recent data suggest further progress, including that the share of goods and services growing at an annual rate above 5% has fallen below 20% — still similar to before the Covid-19 pandemic and similar to the share seen when inflation was slowing rapidly last year.
“It’s moving in the right direction,” Bostic said, referring to a metric he has called one of his touchstones for the central bank’s battle against inflation, which is set to hit a 40-year high in 2022.
Bostic said that in the current situation, “I continue to believe that conditions will likely require a policy rate cut in the fourth quarter of this year.” In subsequent comments to reporters, he said that one reason to be “patient” with this initial cut is that it will come after inflation has clearly regained its way back to 2%, and can be seen as the first of a series of reductions. .
“I’m not tied to any specific path of monetary policy,” Bostic said. “There are plausible scenarios where further cuts, no cuts, or even a hike might be appropriate. I’ll let the data and conditions be my guide.”
Source: Terra
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