Raphael Bostic, the President of the Federal Reserve Bank of Atlanta, who has always had a dovish stance, stated today that he expects only one interest rate cut in 2024. He believes that the recent strong job market and persistent inflation data in the United States may prolong higher interest rates.
The US Department of Labor reported last Friday that non-farm payrolls added 303,000 jobs in March, far exceeding market expectations of 212,000, reflecting a resilient labor market and a resilient US economy.
Combined with the recent data showing no significant cooling of inflation, the yield on US Treasuries has risen significantly, and market attitudes towards rate cuts have become more conservative. Predictions suggest that Federal Reserve officials may keep rates at high levels for longer than expected.
Some Federal Reserve officials have recently publicly stated that the number of rate cuts this year may be lower than the three predicted by most officials at last month’s rate meeting. This includes Raphael Bostic, the President of the Federal Reserve Bank of Atlanta, who is known for his dovish stance.
In an interview with Yahoo Finance on the 10th, Bostic expressed his expectation of only one interest rate cut in 2024, but did not rule out the possibility of two rate cuts or no rate cuts at all depending on the direction of the US economy and inflation.
When asked about the prospect of no interest rate cuts this year, Bostic stated that he is open to changing his views if he receives different signals indicating that the labor market is about to face significant difficulties. He may be willing to change the policy stance and possibly cut rates earlier.
According to the CME Group’s Fed Watch data, the probability of the Fed keeping rates unchanged in May is nearly 94%, and the probability of a 1-point rate cut in June has dropped to 51% (compared to 57% a week ago).
Furthermore, according to the December Federal Funds futures contract quotes from the London Stock Exchange Group (LSEG) on Monday, the market expects the Fed to cut rates by about 60 basis points this year, much lower than the 150 basis points at the beginning of the year, and the estimated decline is the lowest since October last year.
It is worth noting that according to Business Insider, analysts at Bank of America warned in a report last week that if the Fed does not cut rates before June, the door to rate cuts this year will close and rate cuts will be postponed until March 2025. However, the analysts still expect three rate cuts this year and cite recent dovish comments from Fed Chairman Powell, stating that a rate cut in June is still under consideration.
Investors are currently closely watching the inflation-related data to be released this week, including the CPI for March on the evening of the 10th and the Producer Price Index (PPI) data on the 11th.