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MNI: Fed’s Bostic - Soft Inflation Could Bring Cuts Before Q3

(MNI) WASHINGTON

Atlanta Fed president Raphael Bostic warns against keeping policy too restrictive for too long.

Atlanta Federal Reserve President Raphael Bostic Thursday repeated he expects policymakers to begin cutting interest rates in the third quarter, but added if there is a further accumulation of soft inflation data then cuts could begin sooner.

"Because I’m data dependent, I have incorporated the unexpected progress on inflation and economic activity into my outlook, and thus moved up my projected time to begin normalizing the federal funds rate to the third quarter of this year from the fourth quarter," said Bostic in prepared remarks. "The rub is that if we keep policy too restrictive for too long, we risk doing unnecessary damage to the labor market and the macroeconomy."

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Atlanta Federal Reserve President Raphael Bostic Thursday repeated he expects policymakers to begin cutting interest rates in the third quarter, but added if there is a further accumulation of soft inflation data then cuts could begin sooner.

"Because I’m data dependent, I have incorporated the unexpected progress on inflation and economic activity into my outlook, and thus moved up my projected time to begin normalizing the federal funds rate to the third quarter of this year from the fourth quarter," said Bostic in prepared remarks. "The rub is that if we keep policy too restrictive for too long, we risk doing unnecessary damage to the labor market and the macroeconomy."

Keep reading...Show less