The US Federal Reserve announced its new members over the weekend, with four new faces due to join the board. The change comes every year wherein four out of 12 seats change to ensure the Fed remains true to its power-sharing agreement with quasi-public regional banks across the states. John Williams remains as President.
New Fed faces may be key to calculated rate cuts
This year, the regional banks and their members are Cleveland’s Loretta Mester, Atlanta’s Raphael Bostic, San Francisco’s Mary Daly and Richmond’s Tom Barkin. Despite raising rates to a 22-year record high in H1 of 2023, Wall Street is still expecting rate cuts to begin in March this year, continuing for six rounds, so the new FOMC will be under the watchful eye of markets in the US and worldwide.
Previous speeches from the Fed indicate a median of three rate cuts throughout the coming year. It may be that this previous suggestion will come to fruition as two out of the four new members lean toward more dovish measures of boosting the economy.
Atlanta’s Raphael Bostic predicted rate cuts in H2 of 2024, while his new counterpart Daly decidedly announced that rate cuts should begin immediately.
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On the other hand, Barkin suggested that inflation should reach below the Fed’s 2% target before beginning the rate cuts conversation, an unsurprising sentiment considering his neutral-to-hawkish stance.
Although not outrightly stating when she predicts cuts to come, Mester believes that the market has assumed the Fed would cut rates before any solid information has been offered. Mester, like Barkin, leans toward the hawkish side of economic dealings.
US inflation stands at 3.14% as of Monday, 8 January, compared to 3.24% in December 2023 and 7.11% in January 2023.
