Fed Official Cautions: Aims to Avoid Reversing Rate Cuts

On Tuesday, Atlanta Federal Reserve President Raphael Bostic, who is a voting member this year, stated that more data is needed, and the Fed may cut interest rates by the end of the year. Before supporting rate cuts, he needs to see more data and emphasized that he wants to ensure the Fed will not have to reverse course after beginning rate cuts. "We want to be absolutely sure. If we start cutting rates and then have to raise them again, that would be very bad."

Bostic reiterated his stance from March, saying that he might be prepared to cut rates by the end of this year. He joined several other Fed officials who, to varying degrees, oppose taking more aggressive actions in monetary policy. Currently, the market holds a more aggressive expectation of rate cuts from the Fed. According to the futures market, investors believe there is more than a 50% chance of a 50 basis point rate cut in September.

Bostic also acknowledged that he was encouraged by recent inflation data. On Tuesday, data showed that the U.S. Producer Price Index (PPI) for July fell more than expected, with the year-over-year increase narrowing to 2.2%, and service costs declining for the first time this year. The market will closely watch the Consumer Price Index (CPI) data to be released on Wednesday for further signs of cooling inflation.

Recently, several U.S. labor market indicators have been weaker than expected, raising concerns about whether the Fed has waited too long to start cutting rates. Bostic expressed concern about the rising unemployment rate but added that this increase is largely due to a rise in labor supply rather than a decline in demand, which he sees as a positive development.

Despite the recent clear downward trend in the U.S. labor market, signs of weakness in the economy, and inflation continuing to cool as expected, Bostic, like other Fed policymakers, remains cautious about the next steps, hoping to avoid cutting rates too early, which could lead to a subsequent sharp reversal in interest rate policy.

Investors will turn their attention to the global central bank conference next week in Jackson Hole, Wyoming. Although the agenda has not yet been announced, it is expected that Federal Reserve Chairman Jerome Powell will deliver a speech that may provide more clues about the Fed's September meeting.

Disclaimer: This message has been reprinted from other media, and its publication is for the purpose of conveying more information, and does not imply agreement with its views or confirmation of its description. The content of the article is for reference only and does not constitute any suggestions.