Federal Reserve (Fed) official Raphael Bostic stated today that due to gradually meeting inflation targets and a strong labor market, it is expected that the Fed will cut interest rates twice this year, with the first cut potentially occurring in Q3.
In 2024, in addition to anticipating the possible approval of a Bitcoin spot ETF, the market is also awaiting the interest rate cuts by the Federal Reserve (Fed). According to the latest report from Bloomberg today, Raphael Bostic, the president of the Atlanta Fed who has traditionally taken a more dovish stance, stated that the current downward trend in inflation has exceeded expectations and that they are moving towards the 2% inflation target.
Bostic expressed optimism about maintaining economic growth while being able to control inflation. He cited recent three-month and six-month inflation data to demonstrate that price pressures are gradually aligning with the Fed’s goals. Despite unemployment rates being lower than expected and wage growth exceeding inflation rates, indicating that consumers have more purchasing power, Bostic remains optimistic about the trend of maintaining economic growth while simultaneously controlling inflation.
The latest data shows that the consumer price index (CPI) and core CPI in the United States in November last year increased by 3.1% and 4%, respectively, in line with expectations. In terms of the job market, recent data released by the U.S. Bureau of Labor Statistics shows that the unemployment rate in the United States remains at 3.7%, lower than the expected 3.8%. Average hourly wages increased by 0.4% on a monthly basis and 4.1% on an annual basis in December, exceeding the expected 0.3% and 3.9%.
Bostic reiterated the expectation of two interest rate cuts this year and predicted that the first cut would occur in the third quarter, consistent with his statement in December last year.
According to the Fed Watch data from the Chicago Mercantile Exchange (CME), the probability of a 1-basis-point interest rate cut in the current rate range of 5.25% to 5.50% at the next Federal Open Market Committee (FOMC) meeting on January 31 is only 4.7%, while the probability of keeping rates unchanged is as high as 95.3%, and the probability of further rate hikes is 0.
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