Regarding market pricing of Fed’s rate cut, Atlanta Fed President Raphael Bostic told CNBC that “the market is ahead of where I am”. And, “I would say I’m not expecting a rate cut to be imminent, certainly not by September. Things would need to happen in order for that to play out.”
On inflation, Bostic noted “in general, my view is as long as we don’t see inflation running away, that would the sign that our policy is basically at a neutral level”., And, “we could sustain that for a long time and we don’t have to move.”
On the other hand, Bostic was also unconcerned with downward inflation pressure. He said “I’m not super-concerned about that today, and mainly it’s because when you look at inflation expectations, they haven’t started to trail away in a significant way away from our target”.
Nevertheless, he added, “if I started to see a trend moving away to one and a half or one and a quarter [percent] for inflation expectations, then I’d be concerned. But right now, I don’t see our lack of hitting that target … as being a material failure.”