No Urgency To Cut Interest Rates Given US Economy's Strength

• The U.S. Federal Reserve is under no urgent pressure to cut interest rates given a "prospering" economy and job market, Atlanta Fed President Raphael Bostic said in remarks that highlighted the risk inflation may get stuck above the central bank's 2% target or be sent even higher by "pent-up exuberance."
• Bostic said he still thinks it will likely be appropriate for the Fed to approve two quarter-point rate cuts by the end of this year. However, he also said the Fed was walking a "fine line" to be sure that current economic strength does not evolve into "froth" and a new round of inflation.
• Given that there was no sign yet of "degradation" to the job market, Bostic said he and his colleagues in debating the path of interest rates, "have some time to make sure that we get to 2%" inflation. He further stated that he does not envision them being "back to back," with the pace depending on "how participants in the markets, business leaders, and families respond."
• The Fed, at its upcoming March 19-20 meeting, is expected to maintain the benchmark interest rate in the 5.25% to 5.5% range, where it has been since July, and will also issue updated projections for how far rates may fall this year, given recent declines in inflation.
• Investors currently expect an initial rate cut in June, but that could slip if inflation stalls or the job market and wages continue to beat expectations.

(Source: Reuters)