A pair of Federal Reserve officials on Friday threw cold water on Wall Street’s expectations for “imminent” rate cuts.
New York Federal Reserve President John Williams and Atlanta Fed President Raphael Bostic said it’s way too early to consider cutting rates as soon as March – speculation that helped push the Dow Jones Industrial Average to an all-time high this week.
“We aren’t really talking about rate cuts right now,” Williams said in an interview with CNBC, adding that the central bank is still focused on whether it has monetary policy on the right path to continue bringing inflation back to its 2% target.
Williams was the first Fed official to weigh in following the central bank’s decision on Wednesday to hold its benchmark overnight interest rate unchanged in the 5.25%-5.50% range and signal that its historic string of hikes have peaked.
Fed Chair Jerome Powell’s apparent dovish outlook fueled speculation that rate cuts could begin as early as March, the first of possible three 25 basis point cuts for next year.
“I just think it’s just premature to be even thinking about that,” said Williams, a vice chair on the Fed’s rate-setting committee and part of Powell’s inner circle.
Bostic, meanwhile, played down talk of across-the-board rate cuts next year.
He expects two cuts next year – though the first one won’t come until the third quarter, Bostic predicted.
“I’m not really feeling that this is an imminent thing,” said Bostic, who votes on monetary policy next year.
He added that policymakers need to see “several months” of cooling inflation data before they could embark on a new policy of monetary loosening.
On Wednesday, Powell told reporters that it was too early to say whether the central bank was done raising interest rates.
“The question of when it will become appropriate to begin dialing back the amount of policy restraint…begins to come into view, and is clearly a topic of discussion out in the world and also a discussion for us at our meeting today,” he said.
In a whipsaw session, the Dow notched another record close on Friday to end the week up 2.8%.
The S&P 500 index was up 2.5%, and the tech-centric Nasdaq finished 2.9% higher on the week.
All three indexes rose for the seventh straight week.
With Post wires
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