Washington (AFP) – A senior official at the US central bank said Friday that she doesn’t expect any interest rate cuts this year following a recent uptick in inflation.
The US Federal Reserve has held rates at a 23-year high for months as it battles to bring elevated inflation back down to its long-term target of two percent. After easing significantly last year, inflation has accelerated once more since the start of the year, causing concern among Fed officials as they contemplate the right time to start lowering rates.
“I, at this point, have not written in any cuts” for 2024, Fed governor Michelle Bowman told Bloomberg News in an interview following an event in Texas, referring to policymakers’ quarterly economic predictions. “I’ve sort of had an even expectation of staying where we are for longer. And that continues to be my base case,” added Bowman, who is one of 12 voting members on the Fed’s rate-setting Federal Open Market Committee (FOMC).
The median expectation among FOMC members in March was for three rate cuts this year — although some have since dialed back their forecasts in light of the underwhelming inflation data. Last week, the FOMC voted to hold rates steady and said it does not expect to begin easing monetary policy until it has “greater confidence” that inflation is moving sustainably towards its target.
“It is likely that gaining such greater confidence will take longer than previously expected,” Fed chair Jerome Powell told reporters after the decision was announced. Futures traders now assign a probability of just over 60 percent that the Fed will start cutting interest rates by mid-September, according to CME Group data — significantly later than their expectations just a few months ago.
© 2024 AFP
