© Reuters. FILE PHOTO: Atlanta Federal Reserve President Raphael Bostic speaks at the South African Reserve Bank’s Biennial Conference in the Cape Town International Convention Centre, South Africa, August 31, 2023. REUTERS/Esa Alexander/File Photo
By Michael S. Derby
NEW YORK (Reuters) – Federal Reserve Bank of Atlanta President Raphael Bostic said on Friday that while he needs more data to convince him inflation pressures are truly falling, he’s open to lowering rates at some point in the next few months.
“My outlook is to start the normalization, start returning our policy stance to a more neutral stance in the summer time,” Bostic said in a CNBC interview. “We’ve seen tremendous progress” in lowering inflation and that’s pulled forward the likely timing of a rate cut from where he had been expecting it, Bostic said.
The progress on price pressures makes the outlook for policy fluid, Bostic noted. If inflation makes strong progress moving back toward 2% “I’ll be willing to pull [rate cut expectations] forward even further, but I want to see it continue before making that judgment.”
Bostic appeared on the television channel in the wake of recent data showing that consumer and wholesale price rises were bigger than expected during January, which challenged the view that inflation is retreating swiftly back to 2%.
Bostic said data like this affirm the need for the central bank to be patient, something it can afford to be given the broader strength of the economy.
Bostic noted he was modestly surprised by the data “but not in a big way.” He foresees more declines in inflation but reiterated the path back to 2% could be uneven.
The recent data means “we just have to be patient and let’s not get too far ahead and assume that the job is done, because there’s still work to do,” he said.
Bostic also told CNBC that ample market liquidity means the central bank can continue to press forward with its work to shrink the size of its balance sheet, but he warned he didn’t want to push the process too far.
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