Fed Official Leaks Potential Interest Rate Cut. New York Federal Reserve (The Fed) President John Williams opened the possibility of reducing the interest rate of the United States (US) central bank in 2024. Williams stated that the Fed might cut interest rates at the end of the year. According to him, in the remaining year there may be three interest rate cuts.
Williams made this statement after the Long Island Association Regional Economic Briefing in Garden City, New York. He emphasized that the US economy is still strong and projects positive growth and inflation that will continue to decline.
On the speed of rate cuts, Williams stated that this would depend on economic data. Interest rate moves are not necessary at meetings where officials update their quarterly economic projections.
Williams also cited an unexpected rise in consumer price data in January 2024 as a signal of obstacles to achieving the 2% inflation target. He projects that inflation, as measured by the personal consumption expenditure price index, will fall to around 2%-2.25% for 2024 and 2% in 2025.
Previously, investors and several economists predicted an interest rate cut at the March 19-20 2024 meeting. However, these expectations changed after the market significantly reduced expectations for a faster cut.
The Fed Official Leaks Potential Interest Rate Cut. Currently, they expect the first cuts to come in June or July 2024, after reports showed an increase in employment and prices that exceeded previous month’s estimates.
Williams emphasized that he will focus on the data, the economic outlook and the risks in evaluating the appropriate monetary policy path to achieve the Fed’s goals.
