Fed’s Bostic: Economy is maintaining strong momentum that it’s had. Sees Q4 rate cut

• Everyone has been expecting the economy to slow at a faster pace but I’m not hearing that it’s picking up
• If there’s any weakening, it’s at a very incremental level
• Over the longer run, the economy needs to slow to get to longer-run inflation target
• Says he is still thinking about just 1 rate cut this year
• We’re going to have to watch and wait and see how things evolve
• If the economy evolves as I expect, I think it will be appropriate to start cutting in Q4
• Sees inflation coming to target in 2026
• There are some secondary measures in the inflation numbers that have me concerned that things will move even slower
• I”m not in a rush to try to disrupt the dynamic in the economy so long as inflation is moving towards target
• My contacts are not giving me any concerns on employment

Bostic is a hawk so these aren’t too surprising but they won’t quiet the conversation about a more-hawkish Fed.

“There are some secondary measures in the inflation numbers that have me concerned that things may move even slower. If you look at the share of goods in the basket for CPI, the percentage for those goods that’s growing higher than 3% and even 5%; those are much higher now than they were before and they’re starting to trend back to what we saw in the high inflation period. There moving away from what we would like to see, so I’ve got to make sure those aren’t hiding some upward pricing pressure before I’m going to want to move our policy rate.”

This article was written by Adam Button at www.forexlive.com.