Fed officials want people to be patient with the timing of the initial rate cut

STAT

The timeline was echoed by Cleveland Fed President Loretta Mester in comments on Tuesday night at an Atlanta Fed conference.
“We’re in a period when patience really matters,” Boston Fed President Susan Collins said at the same event.
“I think the data has been very mixed … and it’s going to take longer than I had previously thought.”
The policymakers spoke as the Fed has downplayed talk of any further rate hikes, but also noted they feel the economy needs to cool further.
He said he still expects inflation to edge lower through the year with a single rate cut being appropriate in the fourth quarter.
At a separate event at the Dallas Fed, Fed Vice Chair of Supervision Michael Barr added his voice to the chorus, repeating that higher inflation readings in the first quarter had not added to his confidence that prices pressures are easing.
“We need to see more evidence of continued progress on inflation for us to be in a position where we could think about adjusting the policy rate.”
Received a Master’s degree in journalism from Georgetown University, and an undergraduate degree from the University of Notre Dame.

NEGATIVE

Washington, DC; Amelia Island, FL; May 21, (Reuters) – Federal Reserve officials stated on Tuesday that the U.S. s. Before lowering interest rates, the central bank should wait a few more months to make sure that inflation is actually returning to its target of 2 percent.

“I need to see several more months of good inflation data before I would be comfortable supporting an easing of the stance of monetary policy,” Federal Reserve Governor Christopher Waller said at the Peterson Institute for International Economics in Washington, D.C., unless there is a noticeable retreat in the labor market.

Loretta Mester, President of the Cleveland Fed, echoed the timeline in remarks made on Tuesday night at an Atlanta Fed conference.

Mester, who will attend her final Federal Reserve meeting in June before retiring, stated, “I need to see a few more months of inflation data that looks like it is coming down.”.

At the same event, Boston Fed President Susan Collins said, “We’re in a period when patience really matters.”. “I believe there has been a lot of inconsistent data. Moreover, it will take longer than I had anticipated. “.

The Fed has downplayed talk of any additional rate hikes, but the policymakers stated that they believe the economy needs to cool down even more.

All we want is to avoid falling off a cliff. That’s the crucial element,” Waller stated. Right now, nothing appears to indicate that the economy will collapse if we remain in this position for three or four months. His colleagues echoed the remarks, pointing out the minimal risk involved in maintaining high rates for the time being.

After three months of higher-than-expected inflation readings from January to March, the Fed has maintained its benchmark policy rate at 5 percent to 5 percent since last July. As a result, the Fed is only cautiously welcoming more recent encouraging signs of a loosening in the labor market and returning to further progress in lowering inflation toward its 2 percent target.

“This confirms Waller is willing to cut in September—but only if—a more significant decline in inflation occurs in the upcoming months,” stated Krishna Guha, vice chairman of Evercore ISI.

With traders stepping up expectations for a first rate cut in September and a second one at the Fed’s final policy meeting of the year in December, the remarks also seemed to boost market confidence in Fed rate cuts.

“BETTER WAIT MORE TIME.”.

In a different speech, Atlanta Fed President Raphael Bostic used a tone akin to Waller’s, pointing out that the central bank must exercise caution before approving its first rate cut to ensure it doesn’t trigger pent-up spending among households and businesses and put decision-makers in a situation where inflation rapidly increases.

“We should avoid beginning to vacillate. dot. To ensure that doesn’t happen, I’d personally prefer to wait a little bit longer,” Bostic said to reporters in Florida during the Atlanta Fed conference. He stated that he still believes that inflation will gradually decline throughout the year, with a single rate reduction in the fourth quarter being appropriate.

“I’m not eager to lower rates,” Bostic declared. “When we embark on that course, we must ensure that it is clear that inflation will reach two percent. dot. We need to exercise extreme caution when making the first move because of this potential exuberance, and it might need to wait until later. “.

Fed Vice Chair of Supervision Michael Barr joined the chorus at a different Dallas Fed event, reiterating that he was not encouraged by higher inflation readings in the first quarter to believe that price pressures are abating.

“It seems to me that we should remain where we are for a longer period of time than we initially believed,” he remarked. Before we are in a position to consider changing the policy rate, we need to see more proof of ongoing progress on inflation. ****.

One day prior to the publication of the U.S. s. key summary of the central bank’s April 30-May 1 meeting, which concluded with officials feeling that it “will take longer than previously expected” for them to have enough confidence in declining inflation to cut rates. This was expressed by Fed Chair Jerome Powell.

Written by Ann Saphir and Lindsay Dunsmuir, edited by Paul Simao and Richard Chang, with reporting by Pete Schroeder and Howard Schneider.

Our Guidelines: The Trust Principles of Thomson Reuters. Launches a new tab.

includes coverage of Reuters Washington bureau’s financial regulation and policy, with an emphasis on banking regulators. has written about financial and economic policy in the U.S. s. for a period of fifteen years. Roles at The Wall Street Journal and The Hill newspaper are among her prior experiences. Holds an undergraduate degree from the University of Notre Dame and a master’s degree in journalism from Georgetown University.

includes the U. S. A graduate of the University of Maryland and Johns Hopkins University, she has expertise covering the Federal Reserve, monetary policy, and the economy. She has also worked as a foreign correspondent, an economics reporter, and a member of the local Washington Post staff.

scroll to top