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Home » Markets News » More Fed Officials Support Rate Cut in September

More Fed Officials Support Rate Cut in September

  • August 15, 2024
  • 178

On Thursday, two more Federal Reserve officials moved toward an interest rate cut in September as solid economic data resulted in financial markets further scaling back bets the U.S. central bank would start its monetary easing cycle with a bigger-than-usual cut in interest rates.

Atlanta Fed President Raphael Bostic and St. Louis Fed President Alberto Musalem had previously been more cautious than many of their colleagues about cutting interest rates too soon.

Musalem said during an event in Louisville that recent data has bolstered his confidence that inflation was returning to the central bank’s target rate of 2%. It now seemed the balance of risks on unemployment and inflation had moved. He added the time might be getting closer when an adjustment to the moderately restrictive policy might be called for.

Musalem however also emphasized the economy was still doing well and underlined positive factors, like growth in labor supply, as part of the reason for a recent rise in the unemployment rate to a post-pandemic peak of 4.3%.

Investors were last week betting the Fed needed to cut rates by 0.5% at its September meeting after softer-than-expected labor market data. They are now pricing in an about 75% chance of a 0.25% cut next month.

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