US Fed Hints Cautious Rate Cut Despite Easing Inflation, What’s Next?
US Federal Reserve Bank of Atlanta President Raphael Bostic has weighed in on a potential interest rate cut in the coming months. His statements follow positive trends in the country’s economic situation over the past few months. After a relentless fight to combat the cost of living, inflationary figures are finally showing signs of promise.
US Rate Cut Debate Continues
According to a report from Barrons, the Federal Reserve President noted that the US economy will soon be able to allow a rate cut. He said this while speaking at the Conference of African American Financial Professionals.
The Feds have an annual inflation target of 2% and current data have leaned towards this benchmark. As reported earlier, the US PPI inflation eased to 2.2% in July, down from 2.7% in June. This is a promising figure that has further fueled interest on likely slash in the benchmark rates soon.
Despite this market outlook, Bostic exercised caution. This is because he believes a major data validation is needed to ascertain market is back on track.
“It would be really bad if we started cutting rates and then had to turn around and raise them again, right? That would introduce all sorts of uncertainty,” Bostic said. “But it’s coming. It is coming. If the economy evolves as I expect, you all will have bigger smiles on your face by the end of the year.”
One of the most important focal points for American politicians is inflation. As part of his campaign promises, Former US President Donald Trump has vowed to tackle inflation if elected.
As Bostic noted, it will not make much sense for the US officials to cut interest rate and then increase it much later. To prevent this, adequate market data is required to validate the uptrend.
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