Fed officials signal no interest rate cuts before September
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The news: Two Federal Reserve officials, including New York Fed President John Williams and Atlanta Fed President Raphael Bostic, suggested policymakers may not be ready to lower interest rates before September as they confront a murky economic outlook.
What they said: Williams said “it’s not going to be that in June we’re going to understand what’s happening here, or in July,” and described the process as one of “collecting data, getting a better picture, and watching things as they develop.”
Bostic told CNBC, “we’ll have to wait three to six months to start to see where this settles out.”
Fed Vice Chair Philip Jefferson also backed a wait-and-see approach, citing uncertainty and warning against temporary price increases becoming sustained inflation.
The context: The US is midway through a 90-day tariff de-escalation in tariffs with China. Their comments followed Moody’s downgrade of the US government’s credit rating over the weekend. Bostic said the downgrade “will have implications for the cost of capital.”
But despite market unease, Williams said investors “continue to view” the US as “a great place to invest.”
The numbers: The Fed’s benchmark interest rate remains at 4.25% to 4.5%. Investors now expect two quarter-point cuts in 2025, down from four in April, with less than a 10% chance of a cut at the next Federal Reserve meeting on 17-18 June.
