Atlanta Federal Reserve President and CEO Raphael Bostic predicted the central bank’s policymaking Federal Open Market Committee could begin to cut rates in the third quarter or even earlier.
In prepared remarks published ahead of an appearance before an Atlanta business group, Bostic cited the improving state of inflation as the signal for a new direction by the Fed.
“Because I’m data dependent, I have incorporated the unexpected progress on inflation and economic activity into my outlook, and thus moved up my projected time to begin normalizing the federal funds rate to the third quarter of this year from the fourth quarter,” Bostic said. “On balance, it appears that restrictive monetary policy is indeed working to help lower the rate of inflation. The rub is that if we keep policy too restrictive for too long, we risk doing unnecessary damage to the labor market and the macroeconomy.”
Bostic stressed he was not opposed to cutting rates before the third quarter, provided the circumstances warranted such an action.
“If we continue to see a further accumulation of downside surprises in the data, it’s possible for me to get comfortable enough to advocate normalization sooner than the third quarter,” he said. “But the evidence would need to be convincing.”
Still, he insisted that political and economic issues with the nation and overseas could warrant a shift in the Fed’s policies.
“In such an unpredictable environment, it would be unwise to lock in an emphatic approach to monetary policy,” Bostic said. “That is why I believe we should allow events to continue to unfold before beginning the process of normalizing policy.”
Is there a comment phone line # for the Federal Reserve?? If not, there should be!! A recorded line and operated monday to friday 10am-4pm. Someone needs to listen to suggestions and questions!!
Thanks