Fed Officials Say Thursday's Inflation Data Release To Help Decide On Pace Of Rate Hikes

Federal Reserve officials have reportedly said fresh inflation data scheduled to be released on Thursday will help them decide whether the pace of interest rate hikes could be slowed, at the upcoming FOMC meeting, to just a 25 bps increase instead of the larger increases seen for most of last year.

Atlanta Federal Reserve Bank President Raphael Bostic told reporters on Monday if U.S. consumer price data confirms the cooling seen in the most recent monthly jobs report, he would have to take a quarter-point increase "more seriously and to move in that direction," reported Reuters.

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"Eventually I want us to get to 25 basis point rate hikes," Bostic said adding that "the specific timing of that is going to be a function of the data that comes in."

Bostic also added his "base case" is for no rate cuts in 2024 either, although that call has wide confidence bands around it, according to the report. That would make him among the most hawkish of the central bank’s 19 policymakers, most of whom expect cuts to the policy rate to below 4.5% next year, the report said.

San Francisco Fed President Mary Daly told the Wall Street Journal on Monday that lags between Federal Reserve interest-rate increases and their effect on the economy could be an argument to raise rates by 25 bps rather than a half point.

Daly said she would be "paying a lot of attention to core services ex-housing" in Thursday's data release, according to the Journal.  She also indicated it might be a good idea to slow the pace of rate increases to see how previous moves have impacted the economy.

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