Exclusive-Fed’s Bostic sees two rate cuts in 2024, likely starting in third quarter

By Howard Schneider

WASHINGTON (Reuters) – The Federal Reserve can begin reducing interest rates “sometime in the third quarter” of 2024 if inflation falls as expected, Atlanta Fed President Raphael Bostic said on Friday, pushing back against expectations of any imminent move but outlining a deliberative process that will gather steam in coming weeks.

Bostic said he expects inflation, as measured by the personal consumption expenditures price index, to end 2024 at around 2.4%, enough progress towards the U.S. central bank’s 2% target to warrant two quarter-percentage-point rate cuts over the second half of next year.

“I’m not really feeling that this is an imminent thing,” Bostic said in an interview with Reuters, with policymakers still needing “several months” to accumulate enough data and confidence that inflation will continue to fall before moving away from the policy rate’s current 5.25%-5.50% range.

But Bostic also said he has asked his staff to begin discussing principles and thresholds to help frame the debate.

“We’ve got to figure out definitionally what the ‘neighborhood’ looks like” where the inflation outlook is such that rate cuts are warranted, Bostic said. “Over the next several weeks … I think we are going to start talking about that.”

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