The two Feds** believe that inflation is moving in the right direction, but it is still too high, and it still needs to be "patient".
Richmond Fed President Barkin saidIf inflation continues to progress in the near term, the Fed will cut interest rates, but he said he was still looking for evidence that inflation will return to the Fed's 2% target.
Barkin said on Tuesday that "if you think inflation is going to come down smoothly, we will certainly react appropriately." ”
It is worth noting that Barkin will be a member of the FOMC voting committee next year. He said:
"My view is that inflation is more stubborn than the average person. I hope I'm wrong. ”Atlanta Fed President Bostic, who will also be a member of the FOMC voting committee next year, said he expectsRate cuts are less urgent, he stressed that when they evaluate the next policy moves,The Fed must be firm and patient。He said, "For me," he saidI think inflation will come down relatively slowly over the next six months, which means that we do not need to urgently abandon our restrictive positions. ”
Bostic saidAs inflation continues to slowly decline, he expects the Fed to cut rates twice in the second half of 2024, but he said, ".There has been no active discussion on this
Policymakers left rates unchanged for the third time in a row at their December 13 meeting, signaling that they expect three rate cuts next year. But the market believes that the Fed's first rate cut could be in March next year, although several Feds** have tried to lower their expectations for a large rate cut in early 2024.
As inflation continues to move closer to the 2% target, policymakers may need to start cutting interest rates to avoid unnecessary damage to the labor market, Bostic saidHe has not discussed with any of his colleagues how they will handle the decision on when to cut rates. "There's still a lot of uncertainty and we have to be cautious but resolute," Bostic said. usMake sure the disinflationary trend is real
CPI data released last week showed that core CPI fell below 3% on an annualized six-month basis for the first time since 2021. The latest PPI data also paints a favorable picture for a key inflation measure that the Fed is closely watching. On Friday, the US will also release the November PCE data.
Bostic saidHe expects labor market and price pressures to continue to cool and said he will keep a close eye on three- and six-month inflation data。He added:
"Overall, inflation has been stable and moving in the right direction, and I want to make sure it stays that way. ”