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Federal Reserve’s Bostic Encouraged by Continued Strong Economic Momentum, Anticipates Rate Cut in Q4

The economy is expected to slow down at a faster pace, but the speaker does not see any signs of it picking up. Any weakening that may be occurring is happening at a very gradual level. In the long run, it is necessary for the economy to slow down in order to reach the desired inflation target. The speaker is considering the possibility of only one interest rate cut this year and is closely monitoring the situation to see how things progress.

The speaker predicts that inflation will reach its target in 2026, but there are some secondary measures in the inflation numbers that are causing concern about a potential slower movement. Despite these concerns, the speaker is not in a rush to disrupt the current economic dynamics as long as inflation is on track to reach the target.

Contacts related to employment have not expressed any worries to the speaker, who takes a more hawkish stance. The speaker points out certain aspects of the inflation numbers that are worrisome, particularly the rising percentage of goods in the CPI basket that are growing at rates above 3% and even 5%. This trend is reminiscent of the high inflation period and needs to be monitored closely to ensure it does not lead to upward pricing pressure before any decisions are made regarding policy rates.

In summary, while there are concerns about a potential slower movement in inflation numbers, the speaker believes it would be appropriate to start cutting rates in the fourth quarter if everything continues as expected. Employment contacts do not appear worried, and contacts related to employment have not expressed any concerns. However, certain aspects of

By Samantha Jones

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