Atlanta Fed President Raphael Bostic said Friday that his own projection is that inflation could come down to the central bank’s 2% target in the next eight to 10 months.
Asked in an interview on Bloomberg Television whether he had some idea of how long it would take to get inflation down to that target rate, Bostic replied: “I would say it’s going to be in the second half of next year.”
He said that a lot could happen over that time period and that he would not attempt to be more precise.
This is much more optimistic than the Federal Reserve’s own forecast.
The median forecast of top Fed officials and a separate Fed staff forecast both see inflation staying a bit above 2% until 2026.
The Fed’s inflation measure, the personal consumption expenditure price index, was running at a 3.4% annual rate in September, the latest month for which data is available. The core index, excluding volatile food and energy prices, is running at a 3.7% rate.
Bostic said the Fed’s benchmark interest rate, now in the range of 5.25% to 5.5%, is high enough to put downward pressure on inflation. He said inflation can come down to the target without the economy falling into a recession.
“We’re going to be in sort of slow, steady growth that is methodical” in 2024, he said.
Asked when the Fed would cut interest rates, Bostic replied: “That’s down the road.”
He said that the Fed would mull when it was best to cut rates as inflation gets closer to 2%, adding: “We can’t wait until we are exactly at 2% to start reducing rates. It has got to be before that.”
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fell sharply on hopes in the financial markets that the Fed was done hiking.
Bostic said the data “tells me that our policies are really starting to work through the economy in a way that can help us get to our 2% target for inflation with minimal pain.”
He said that all of his business contacts were telling him that the economy was slowing down.
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