The Fed, which has been on hold since January 2025, is expected to cut interest rates in September. While the September rate cut was initially priced in at nearly 100%, it is now priced in at 81%.
At this point, while waiting for the economic data to arrive before the September meeting, FED members made one hot statement after another.
Atlanta Fed President Raphael Bostic, speaking at the opening of the Metro Atlanta Chamber of Commerce board meeting, stated that he expects only one more interest rate cut this year.
Bostic said the current 4.25%-4.50% interest rate is marginally restrictive, not overly restrictive.
Bostic stated that the economic outlook remains uncertain, but he no longer wants interest rates to remain in one direction and to oscillate between rate hikes and cuts.
Finally, Bostic noted that inflation is still running well above the Fed’s 2% target, adding that he maintains his expectation of a single interest rate cut, but that this forecast could change depending on the data.
We Should Not Rush to Cut Interest Rates!
Besides Bostic, Kansas City Fed President Jeffrey Schmid also spoke. Speaking to CNBC at the annual symposium in Jackson Hole, Wyoming, Schmid said there should be no rush to lower interest rates.
At this point, Schmid said there should be no rush to cut interest rates because inflation is still above the central bank’s 2% target and the labor market is still in solid shape.
At this point, Schmid expressed his doubts about lowering interest rates in September and said that there was still much work to be done on inflation.
“I think we’re in a really good spot and I think we need to have very definitive data to make that rate cut.
“We will sit down at the table in September and reach a conclusion. But I think there’s a lot to say before September. Markets are in good shape, but acting hastily could pose a risk.”
Schmid said inflation is still well above the Fed’s 2% target, close to 3%, and the final phase is challenging.
Schmid will vote on the rate-setting committee this year.
*This is not investment advice.