Atlanta Federal Reserve President Raphael Bostic said on Friday that he does not foresee an interest rate cut until the end of 2024.
Despite progress on the issue of inflation and the economic slowdown, the central bank official said there is still a lot of work to be done before the Fed reaches its inflation goal of 2% annually.
The Fed has raised the prime lending rate 11 times since March 2022 with a total increase of 5.25 percentage points. Although Bostic said that he does not see policymakers easing interest rates anytime soon, he clearly asserted that interest rates have reached a level "sufficiently restrictive" where they do not need to be raised any further.
Bostic is not a voting member this year on the interest rate-setting Federal Open Market Committee (FOMC), but he is set to have voting rights in 2024.
He said that he does not expect "we will cut rates before the middle of next year, at the earliest."
The probability of a December hike is just 25%, based on the CME Group's FedWatch Tool. The market expects two or three cuts of a quarter point by the end of 2024.
One of the reasons that will cause the Fed to consider lowering rates is a slowdown in economic growth. Although Bostic said that he did not expect a recession to happen, he sees the current situation as changing.
Bostic was speaking after some significant movements in financial markets, notably in bond yields that crossed the psychologically important 5% level earlier in the session, the benchmark 10-year US bond yield was relatively loose, and recently hovered around 4.97%.
