Bloomberg "Fed Rate Cut: Focus on Possibility Within the Year, Not Number of Times"

Unyielding Inflation Pushes Back Interest Rate Cut Outlook
Experts Say "Indefinite Hold Status"

Bloomberg reported on the 28th (local time) that the debate surrounding the Federal Reserve's (Fed) interest rate cuts in the US is shifting from how many times rates will be cut this year to whether rates will be cut within the year.

The benchmark interest rate is expected to be maintained at the May Federal Open Market Committee (FOMC) meeting this week. Bloomberg expects the focus to be more on the statement content and Fed Chair Jerome Powell's press conference rather than the rate itself. Bloomberg stated, "This week's FOMC statement will be similar to March's, but the Fed may acknowledge that the recent decline in inflation has slowed," and "Chair Powell may repeat his recent remarks."

Jerome Powell, Chairman of the U.S. Federal Reserve
[Photo by Yonhap News]

Inflation indicators from January to March this year did not easily decline and showed higher-than-expected figures. On the 16th, Chair Powell said, "Recent data has not given confidence in the possibility of rate cuts and suggests it may take longer than expected to achieve the target." He also stated, "If necessary, rates can be maintained."

Besides Chair Powell, Fed officials also judge that an immediate rate cut is not urgent. Fed Governor Michelle Bowman said, although not the base scenario, "If the inflation slowdown stops or reverses, there is a risk that the benchmark rate will need to be raised further." Raphael Bostic, President of the Atlanta Fed, suggested the timing for rate cuts as the end of this year. He also said, "If inflation starts moving in the opposite direction of the target, there is no choice but to respond accordingly," and "We must remain open to rate hikes."

Experts have begun to forecast that there will be no rate cuts within the year. At the beginning of the year, up to six rate cuts were expected, but the sentiment has sharply reversed. Unlike last year, inflation decline is expected to be minimal in the second half of this year.

Dean Maki, Chief Economist at Point72 and former Fed economist, said, "If inflation figures do not improve sufficiently, the Fed will maintain an indefinite pause," adding, "The Fed believes it is on a bumpy road toward rate cuts." Diane Swonk, Chief Economist at KPMG, said, "There is debate about whether there will be no rate cuts at all," and "The Fed will have to backtrack on rate cuts and consider new messaging."

This content was produced with the assistance of AI translation services.