(Bloomberg) -- Federal Reserve Bank of Atlanta President Raphael Bostic said he continues to expect one interest rate cut this year in the fourth quarter, unchanged from his view in March, amid signs inflation has resumed its decline.
Bostic cited details within April and May inflation reports as “glimmers” of evidence that price changes are moving to the Fed’s 2% goal, and said he sees risks to the labor market and inflation as becoming more balanced in recent weeks. Bostic’s latest views were included in an essay posted to the Atlanta Fed’s website Thursday and a separate press briefing.
“Inflation still remains the chief concern,” Bostic said. “But the risks are becoming more balanced across our two mandate items, and we’ll just have to think about that.”
“I’m just going to let the data show me what happens,” he said.
Bostic’s projection for one cut echoes that of the Federal Open Market Committee. Earlier this month Fed officials penciled in just one rate reduction for 2024, down from the three projected in March, according to the median forecast.
While the consumer price index was released during the meeting, Bostic said he didn’t change his projection during the gathering.
The Atlanta Fed chief said there are “plausible scenarios” where he could see more cuts this year, none or potentially even a rate hike, adding, “I will let the data and conditions on the ground be my guide.”
“I would say every meeting is a live meeting,” he said.
2025 Outlook
Bostic told reporters he has penciled in four interest rate cuts for 2025, but noted he didn’t have high confidence in projections that distant. He said he anticipates inflation to fall to 2% next year, or perhaps a bit later.
“This is a long term arc” and the Fed might not achieve the 2% goal in the next 12 months, he said. “It’s going to be a much longer experience and that’s why I’m preaching patience; I’m preaching vigilance.”
Bostic said while yearly inflation figures may show less progress in the second half because of base effects from year-earlier figures, it’s important to look at a wide range of data in assessing progress. He noted he pays close attention to the breadth of price advances, which have declined recently.
US central bankers left their benchmark rate unchanged at a more than two-decade high earlier this month, a level they’ve maintained for nearly a year. Policymakers say they need to see more data to be convinced that inflation is on a sustainable path toward their 2% target.
Some Fed officials have sounded more concerned of late about the prospects for the US labor market, with San Francisco Fed President Mary Daly warning the job market is nearing an inflection point, where further slowing could mean higher unemployment. Chicago Fed President Austan Goolsbee warned separately that with too-tight policy for too long, “you’re going to have to start worrying about what’s happening to the real economy.”
The Fed’s preferred underlying price gauge is expected to rise just 0.1% in May from a month earlier — marking the slowest advance of the year — in data out Friday.
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(Updates with additional detail from essay.)
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