Fed members continue to push back against rate-cut hopes

Federal Reserve policymakers are continuing to push back against expectations for significant interest-rate cuts this year, with governor Michelle Bowman asking for patience before any policy easing takes place.

“It is of utmost importance that we maintain credibility in pursuing our fight against inflation by proceeding carefully and deliberately to achieve our 2% goal,” Bowman said in a speech in Texas.

The comments follow similar remarks made by the president of the Boston Fed, Susan Collins, and her Minneapolis counterpart Neel Kashkari earlier this week.

Collins said the Fed needs "more time than previously thought" to get inflation back down to the 2% target, while Kashkari predicted that policy would remain restricted "for an extended period of time".

Just as expectations build about rate cuts in the UK and eurozone, Fed members are attempting to temper hopes that the US central bank will follow suit despite leading economic indicators in the past week showing that the US labour market was beginning to ease.

Figure released last Friday showed that non-farm payrolls increased by less than expected, while the unemployment rate ticked higher. Meanwhile, on Thursday, claims for jobless benefits jumped to their highest levels in more than eight months.

The figures, however, followed a string of stronger-than-forecast inflation and job creation over the first quarter of 2024.

Speaking on Friday, Dallas Fed president Lorie Logan said at an event in New Orleans that it was "just too early to think about cutting rates".

“I need to see some of these uncertainties resolved about the path that we’re on and we need to remain very flexible to policy and continue to look at the data that’s coming in and watch how financial conditions are evolving," Logan said.