Although U.S. inflation may be slowing, the Federal Reserve remains cautious about the prospect of rate cuts
foreign exchange documentary platform- The Federal Reserve remains cautious about the prospect of interest rate cuts, even though U.S. inflation is likely to slow in the coming months, analysts at Macquarie said on Tuesday.
In a note to clients, analysts said there had been "no shortage of cautious rhetoric" from the Fed in recent days.
Several Federal Reserve officials have said they will not begin to lower borrowing costs from their more than 20-year highs until they see more evidence that U.S. price inflation is falling back to its mandated 2 percent target.
Minneapolis Fed President Neil Kashkari reiterated that sentiment in an interview with CNBC on Tuesday, telling the business news channel that the central bank should wait for more substantial progress on inflation before considering a rate cut.
"I don't think we need to be in a hurry to cut rates, I think we should take the time and be prepared," he told CNBC.
While Macquarie analysts say they believe the Fed will eventually be persuaded to lower rates because of rent-related costs in the coming months, they believe it will raise its estimate of the so-called "R-star rate projection" - the level of interest rates that might exist when the economy is strong and inflation is stable.
Analysts added that they expected the dollar to be constrained by the Fed's wariness, unlike that of the "relatively impulsive" European Central Bank, whose officials mostly hinted at their upcoming June meeting that they were ready to begin a rate-cutting cycle, with ECB board member Francois Villeroy even hinting that a subsequent rate cut could come in July.
Please indicate the source: https://www.daoctech.com/fxnews/1176.html
Disclaimer: The content of this article does not represent the views of the Institute of Foreign Exchange. The content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.