Fed: too early to cut rates?

(Boursier.com) — Michelle Bowman, governor of the Fed, in turn estimated yesterday that it was too early to reduce rates. The official anticipates a continued decline in inflation with rates remaining at the current level. It says it will carefully monitor incoming data to assess the appropriate monetary posture. Bowman also notes several risks that could add to inflationary pressures, citing the repercussions of geopolitical conflicts, the easing of financial conditions or the still tense labor market.

However, if new data shows that inflation is moving steadily towards the 2% target, it will then become appropriate to gradually lower rates to prevent monetary policy from becoming too restrictive. That’s what Bowman said in his remarks during a speaking engagement for the Florida Bankers Association. From the manager’s point of view, however, this would not yet be the case.

Note that Raphael Bostic, president of the Atlanta Fed, as well as Susan Collins, head of the Boston Fed, and John Williams of the New York Fed, are speaking this evening.

According to the CME Group’s FedWatch tool, the probability of an additional monetary status quo leaving the range on the fed funds rate between 5.25 and 5.50% on March 20, at the end of the next monetary meeting, is over 99% (!). The probability that rates will still remain unchanged on May 1 after the next meeting reaches more than 79%. The first monetary easing could take place on June 12.