MAY 22, 2023 – AS INFLATION REMAINS ENTRENCHED A RATE CUT IS UNLIKELY THIS YEAR
As inflation is continuing to run above the Fed’s targeted 2 percent, Atlanta Fed President Raphael Bostic believes there will not be any cuts to the Federal Funds rate in 2023, even if there is a recession. He spoke at the Atlanta Fed’s Financial Markets Conference last week. Bostic further said another increase would be more likely.
The CPI for April, which was recently released, is running at 4.9 percent, while core inflation, which is the Fed’s preferred measure, is 5.5 percent. Consumer spending has remained steady with April retail sales up 0.4 percent, the first advance since January. Labor markets have also remained tight despite the higher borrowing rates.
The Fed meets again on June 13-14, and they will be closely watching upcoming data releases to direct policy. The central bank has reiterated numerous times its commitment to returning to 2 percent inflation, and although the data seems to be moving in the right direction, there seems to be a way to go.