Atlanta Fed’s Raphael Bostic Foresees No Interest Rate Cuts in 2023 Amid Inflation Concerns

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Key Insights

• Raphael Bostic, President of the Atlanta Fed, anticipates no interest rate reductions in 2023 despite potential recession scenarios.
• Chicago Fed President Austan Goolsbee stresses the importance of reducing inflation without triggering a recession, adopting a cautious policy stance.
• Minneapolis Fed President Neel Kashkari cautions against complacency from short-term inflation data, urging continued efforts to lower inflation.

In a recent CNBC interview, Atlanta Federal Reserve Bank President Raphael Bostic emphasized that inflation remains elevated and that the Federal Reserve is unlikely to lower interest rates during 2023, even if the economy enters a recession. He indicated that rate cuts are not expected until well into 2024, with the possibility of further rate hikes still on the table.

Bostic highlighted the need to assess the effects of the Fed’s prior policy moves, which included ten rate increases since March 2022, before considering any adjustments. This cautious approach aims to understand how these hikes influence economic conditions.

Similarly, Chicago Fed President Austan Goolsbee shared his perspective on CNBC, noting that the full impact of the Federal Reserve’s actions has yet to materialize. He underscored the challenge of steering inflation back to target levels without inducing a recession, advocating for prudence amid ongoing economic uncertainty. Goolsbee mentioned closely monitoring credit conditions, debt ceiling discussions, labor market trends, and pricing data ahead of the Fed’s June meeting.

Minneapolis Fed President Neel Kashkari, speaking at an event in St. Paul, warned against drawing premature conclusions from recent slight declines in consumer prices. He stressed the importance of completing the task of reducing inflation to sustainable levels.

Market data from CME Group indicates that there is over a 75% probability that the Federal Reserve will maintain current interest rates at its upcoming June meeting, reflecting investor expectations based on fed funds futures.

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