Post-Bostic headline: “Why a Fed rate cut in June is not yet a done deal”

ICYMI, Bostic spoke late on Friday, after RTH:

• ICYMI: Late Friday Fed’s Bostic shifted his 2024 forecast to only 1 rate cut 2024 (from 2)

Its not like Bostic is an outlier with this view, his FOMC colleague Kashkari has been forthright also:

• If economy continues to be healthy, why would we cut rates

That link is to comments from Federal Reserve Bank of Minneapolis President Neel Kashkari speaking in an interview with the Wall Street Journal in the first week of March.

I’ve spotted this from Dow Jones / Market Watch, just a few hours ago:

• Why a Fed rate cut in June is not yet a done deal

Some of the remarks ion the article follow.

Ethan Harris, retired chief global economist at Bank of America:

• “The bond market has expected them to move a little early the whole time. I wouldn’t be surprised if they wait one more meeting [until July]”

Economists at Jefferies, in a note to clients.

• “There is a swelling group of Fed officials that believe rates may need to be higher for longer”
• … economic forecasts released by the central bank … (revealed) 7 of 19 Fed officials said that the “neutral rate” is above 3%. That suggests they believe the Fed’s current policy rate is not very restrictive on the economy.

Jeremy Schwartz, senior U.S. economist at Nomura:

• Powell’s dismissal of unfavorable inflation creates the risk that further upside inflation surprises could lead to a sharper reassessment of the path for policy.

  Schwartz sees only two cuts this year, one in July and the second in December.

—

There is always the possibility that this is just a ‘hawks vs. doves’ at the FOMC debate. FWIW, I don’t think it is. We’ve seen ‘sticky’ inflation all around the globe, and even rising inflation in some countires. If you are convinced of a June rate cute, just be careful out there!

Federal Reserve Powell

This article was written by Eamonn Sheridan at www.forexlive.com.