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US Fed officials urge patience on interest rate cuts / Photo: Drew Angerer - GETTY IMAGES NORTH AMERICA/AFP
US Fed officials urge patience on interest rate cuts
Two US Federal Reserve officials indicated Wednesday that the nation's central bank is on track to tackle inflation, but that it is still too soon to begin lowering interest rates.
Fed policymakers have said in recent months that they are making good progress in bringing inflation down towards its long-run target of two percent, and signaled in December that they expect to cut interest rates three times this year.
That's because high interest rates have pushed the Fed's favored inflation gauge down from a high of more than seven percent in 2022 to an annual rate of less than two percent over the last six months.
At the same time, hiring and economic growth have remained robust, raising hopes of an end to high interest rates.
But speaking at events in Washington on Wednesday, two voting members of the Fed's rate-setting Federal Open Market Committee (FOMC) indicated that the time had not yet arrived to do so.
"We have a labor market that is at historic levels of strength," Richmond Fed President Tom Barkin told an event in the city.
"Job gains, unemployment, job openings, initial jobless claims, all of these metrics are very strong and inflation is coming down," he said. "So I'm very supportive of being patient, you know, to get to where we need to get."
Speaking earlier the same day, Fed Governor Adriana Kugler also indicated she believed the US central bank should pause for a little longer before acting on interest rates.
"At some point, the continued cooling of inflation and labor markets may make it appropriate to reduce the target range for the federal funds rate," she said.
"I am pleased by the progress on inflation, and optimistic it will continue, but I will be watching the economic data closely to verify the continuation of this progress," she added.
Futures traders appear to have taken recent comments by Fed officials to heart, dialing back their expectations of a March rate cut over the last month, according to an AFP analysis of data from CME Group.
They have assigned a probability of more than 65 percent that the US central bank will have begun lowering interest rates by the time of its following meeting in May.
(A.Thompson--TAG)
