Federal Reserve (Fed) official Raphael Bostic stated today that due to gradually meeting inflation pressures and a strong labor market, it is expected that the Fed will cut interest rates twice this year, with the first rate cut potentially happening in Q3.
In 2024, the market is not only focused on the potential approval of a Bitcoin spot ETF, but also anticipating the interest rate cuts by the Federal Reserve (Fed). According to Bloomberg’s latest report today, Raphael Bostic, president of the Atlanta Federal Reserve Bank, who has always had a dovish stance, stated that the current downward trend in inflation is exceeding expectations and that they are moving towards the 2% inflation target.
Bostic cited recent three-month and six-month inflation data to demonstrate that price pressures are gradually aligning with the Fed’s target. Despite the unemployment rate being lower than expected and wage growth exceeding inflation rates, meaning consumers have more purchasing power, Bostic expressed optimism about the trend of maintaining economic growth while controlling inflation.
The latest data shows that the US Consumer Price Index (CPI) and core CPI year-on-year growth rates for November last year were 3.1% and 4%, respectively, in line with expectations. In terms of the job market, data recently released by the US Bureau of Labor Statistics shows that the US unemployment rate remained at 3.7%, lower than the expected 3.8%. Average hourly earnings in December increased by 0.4% monthly and 4.1% yearly, surpassing expectations of 0.3% and 3.9%, respectively.
Bostic reiterated the expectation of two interest rate cuts this year and predicted that the first rate cut will occur in the third quarter, consistent with his statement in December last year.
According to the Fed Watch data from the Chicago Mercantile Exchange (CME), the probability of a 1-basis-point interest rate cut at the next Federal Open Market Committee (FOMC) meeting on January 31st is only 4.7%, while the probability of keeping rates unchanged is as high as 95.3%, and the probability of further rate hikes is 0.
(Source: CME Fed Watch)