If you’re hoping for relief from high mortgage rates and credit card interest, you might need to exercise patience. According to Raphael Bostic, the president of the Atlanta Fed, significant changes may not occur until the summer months.
Bostic shared his perspective with CNN, projecting a decline in the US inflation rate to “the lower twos” by the year’s end, down from December’s 3.4%. He anticipates the first move to lower interest rates happening sometime during the summer.
Since March 2022, the Federal Reserve has implemented multiple interest rate hikes to combat soaring inflation and moderate the rapidly growing US economy following the easing of pandemic restrictions. While higher interest rates help to temper investment and spending, they also increase the cost of debt, including mortgages and credit card interest.
Acknowledging the impact of high prices on individuals, Bostic emphasized that Fed officials are not immune to economic challenges. “We live the economy too,” he noted. “I have to go to the grocery store like everybody else. I buy gas like everybody else.”
However, Bostic emphasized that interest rates will only decrease when inflation data demonstrates a significant cooling trend. Despite robust economic performance, including January job growth surpassing expectations and fourth-quarter GDP growth exceeding forecasts, inflation remains a concern.
The Fed has signaled the possibility of three interest rate cuts in 2024, leading to speculation among economists and analysts regarding the timing of the first cut. While some banks, such as Goldman Sachs and Bank of America, initially anticipated cuts as early as March, recent statements from Fed Chair Jerome Powell suggest otherwise.
Powell indicated that interest rate cuts in March are unlikely, tempering expectations for an immediate adjustment. Now, market focus shifts to upcoming US January inflation data for further insights.
The Federal Reserve Open Market Committee’s next meeting is scheduled for March 19-20, where policymakers will continue to assess economic conditions and make decisions accordingly.
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