The Fed must be cautious about its first monetary policy move – Raphael Bostic

He president of the Atlanta Federal Reserve, Raphael Bosticstated on Tuesday that Tight monetary policy is hitting rate-sensitive sectors and slowing investmentaccording to Reuters.

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“Businesses are confident in the underlying strength of the economy; results should remain strong over the next one to two years.”

“The effectiveness of monetary policy may be weaker than in the past, but that does not mean it is not having any impact.”

“The Fed's top priority is to get inflation back to 2%.”

“He expects inflation to decrease but relatively slowly, he would not expect a rate cut before the fourth quarter.”

“You no longer hear about difficulties in supply chains; the hope is that goods deflation will continue.”

“The upcoming review of the framework will be forceful, given the number of open questions about economics and politics.”

“While companies are confident in the economy, they don't feel like they have the same pricing power as they did 6 months ago.”

“The Fed should be cautious about its first monetary policy move; it may have to be later so as not to stoke pent-up exuberance in investment and other spending.”

“I would prefer to wait longer for a rate cut to make sure inflation doesn't start to rebound.”

“I'm not in a rush to lower rates; I want to make sure the policy easing is unequivocal.”

Market reaction

The US Dollar Index rose slightly following these comments and stood at 104.68 points, up 0.1% on the day.

Source: Fx Street

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