Nathan Sheets, Global Chief Economist at Citi said that the US Federal Reserve might lower interest rates in September 2024 if inflation keeps going the way it is now.
As expected, policymakers kept the main interest rate at around 5.3% on June 12.
The rate has stayed unchanged since July of last year after the Fed raised it 11 times to slow down borrowing, spending, and inflation.
The government reported on June 12 that the "core" consumer price index, which leaves out food and energy costs, went up by 0.2% from April to May. This was lower than the 0.3% rise the previous month and the smallest increase since October. Compared to a year ago, core prices increased by 3.4%, down from last month’s 3.6% rise.
Also Read: US inflation cooled in May in sign that price pressures may be easing
Discussing the US Fed decision, in an interview with CNBC-TV18, Sheets said, “Powell presented his dot plot and said, look, our committee's central tendency at the moment is one cut. But he hardly fell on his sword about it. He emphasised it was a conservative approach.”
“A number of other members of the committee said, one month of inflation is not going to dramatically change either my forecast or my expectations for policy,” he added.
Also Read: US Federal Reserve holds rates steady, signals only one rate cut expected this year
Nathan Sheets said the Federal Reserve should not base its decisions on just one piece of data. He mentioned that everyone on the committee had the chance to make changes.
For the entire interview, watch the accompanying video
Catch all the latest updates from the stock market here
As expected, policymakers kept the main interest rate at around 5.3% on June 12.
The rate has stayed unchanged since July of last year after the Fed raised it 11 times to slow down borrowing, spending, and inflation.
The government reported on June 12 that the "core" consumer price index, which leaves out food and energy costs, went up by 0.2% from April to May. This was lower than the 0.3% rise the previous month and the smallest increase since October. Compared to a year ago, core prices increased by 3.4%, down from last month’s 3.6% rise.
Also Read: US inflation cooled in May in sign that price pressures may be easing
Discussing the US Fed decision, in an interview with CNBC-TV18, Sheets said, “Powell presented his dot plot and said, look, our committee's central tendency at the moment is one cut. But he hardly fell on his sword about it. He emphasised it was a conservative approach.”
“A number of other members of the committee said, one month of inflation is not going to dramatically change either my forecast or my expectations for policy,” he added.
Also Read: US Federal Reserve holds rates steady, signals only one rate cut expected this year
Nathan Sheets said the Federal Reserve should not base its decisions on just one piece of data. He mentioned that everyone on the committee had the chance to make changes.
For the entire interview, watch the accompanying video
Catch all the latest updates from the stock market here
(Edited by : Shweta Mungre)
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