Last week's April CPI injected a dose of strength into the market, and expectations of interest rate cuts were once again rekindled. Since this week, many Federal Reserve executives have been speaking out intensively, sending a more clear signal about the next interest rate path.
Overnight, Federal Reserve Governor Waller, New York Federal Reserve Chairman Williams delivered speeches, Atlanta Federal Reserve Chairman Bostick, Cleveland Federal Reserve Chairman Meister and many other senior officials delivered speeches one after another.
Overall, although inflation data has boosted market confidence, the overall position of Federal Reserve officials is still “hawkish,” saying that it is still necessary to see a trend where inflation continues to decline before making a decision to cut interest rates.
Federal Reserve officials have mixed opinions on the specific path to cutting interest rates. Some officials believe that if last week's trend of cooling inflation continues for a long time, then it is quite possible to cut interest rates by the end of the year. At the same time, considering the situation where core inflation continued to rise in the first quarter of this year, some officials said that restrictive monetary policies may not leave the market too soon.
Federal Reserve Governor Waller “releases pigeons”: If supported by data, consider cutting interest rates by the end of the year
A popular candidate for the next Federal Reserve Chairman and current Federal Reserve Governor Waller said that although recent data indicates that progress may have resumed in terms of inflation, he needs to see “a few more months” of good inflation data before starting to cut interest rates, and believes there is no need to raise interest rates further.
In a subsequent interview with the media, Waller gave more details on the timeline of interest rate cuts:
“The data for the next three to five months continues to weaken, and the Federal Reserve may consider cutting interest rates at the end of 2024; if sufficient favorable data is obtained, it can consider cutting interest rates at the end of this year or the beginning of next year.”
In terms of inflation data, Waller believes that the data shows that US inflation has not accelerated, and further increases in policy interest rates are “probably unnecessary.”
FOMC Permanent Voting Committee Williams: Interest rates will not be cut until the fourth quarter
FOMC Permanent Voting Committee and New York Federal Reserve Chairman Williams said interest rates will not be cut until the fourth quarter.
Regarding the latest inflation data, Williams believes that “one-time data does not represent a trend,” and the Federal Reserve's top priority is still to control the inflation rate back to 2%.
In terms of interest rates, Williams said that interest rates will be restrictive, but the effect “may be a little weaker.”
2024 FOMC Voting Committee Bostic: Not in a hurry to cut interest rates; we need to be cautious when cutting interest rates for the first time
In 2024, FOMC voting committee and Atlanta Federal Reserve Chairman Bostic said that the US economy has always been quite resilient. The economy will continue to grow in the future, but inflation will slow down.
In terms of interest rates, Bostic said that the Federal Reserve's policy position is restrictive, and it will take longer to push the Federal Reserve to decide on monetary policy.
Bostic believes that the Federal Reserve must “be careful about cutting interest rates for the first time,” and said:
“Interest rates may need to be cut later to ensure that inflation does not rebound and avoid stimulating investment enthusiasm and other expenses.”
Last week, Bostic said that if the trend of “inflation slows steadily and economic momentum continues” in the future, then “it may be appropriate to cut interest rates near the end of the year,” and if the situation is not consistent, “it will not be limited to specific policies and policies.”
2024 FOMC Voting Committee Meester: Hope to see inflation fall “for a few more months”
In his speech in 2024, FOMC Voting Committee and Cleveland Federal Reserve Chairman Meister predicted that the US economic growth rate will be higher than the trend level this year and that inflation will fall back, but it will take longer than expected.
In terms of interest rates, Meester believes that the current state of the policy is good; we still need to see inflation fall for several more months. Inflation expectations are also worth paying attention to.
Meester added that the risk of maintaining the current level of interest rates is not too great, because the job market is performing well, which means that the restrictive nature of the policy may not be as prominent as one might think.
Overall, Mester believes that the Fed's patience is the right policy, requiring an orderly, patient, and holistic approach to data.
Meester said on Monday that she no longer thinks it is appropriate for the Federal Reserve to cut interest rates three times in 2024; such interest rate cuts may be too many times. “I have publicly stated before that my forecast is the same as the median, three times, yet I don't think this is still appropriate in terms of the economic developments I have seen so far.”
Boston Federal Reserve Chairman Collins: Interest Rates Will Remain High Longer
Boston Federal Reserve Chairman Collins said he would like to see more evidence that price pressure is moving towards the 2% target.
Collins said:
“I think this is a moment or period where patience is very important, and the data will be very complex and will take longer than I expected.”
Collins also added that current restrictive interest rates may further strain economic growth.
Earlier this month, Collins delivered a speech conveying the same position: interest rates may need to stay high longer than previously desired in order to curb demand and reduce price pressure.