In a recent statement, Patrick Harker, the President of the Federal Reserve Bank of Philadelphia, suggested that one interest-rate cut in 2024 would be appropriate, based on the current economic forecast. This announcement reinforces the likelihood of sustained high interest rates.

What Happened: Harker, speaking at an event in Philadelphia, expressed that the recent consumer price index report for May, which showed a decrease in consumer prices, was “very welcome.” However, he emphasized the need for more economic data to confirm that inflation is on track to meet the central bank’s 2% target, reported Bloomberg.

“If all of it happens to be as forecasted, I think one rate cut would be appropriate by year's end,” Harker said. “Indeed, I see two cuts, or none, for this year as quite possible if the data break one way or another. So, again, we will remain data dependent.”

Harker, who does not have voting rights on monetary policy decisions this year, believes that the current policy rate, which has remained unchanged for nearly 11 months, will continue to effectively manage inflation for a while longer.

Despite expecting economic growth to slow, Harker predicts that it will remain above trend, and the unemployment rate will rise modestly. He also anticipates a “long glide” back to the Fed’s inflation goal.

See Also: Consumer Sentiment Tumbles In June, Reaches 7-Month Low: ‘High Prices As Well As Weakening Incomes’ Raise Concerns

Why It Matters: Neel Kashkari, President of the Minneapolis Federal Reserve, echoed similar sentiments on Sunday, suggesting a single rate cut by year-end was a “reasonable prediction.” Speaking on CBS’ “Face the Nation,” Kashkari stressed the need for more evidence to ensure inflation is on a downward trajectory toward the 2% target.

The Fed has maintained its benchmark policy rate in the 5.25%-5.50% range since July 2023 to counter inflationary pressures.

Last week, Goldman Sachs reaffirmed its forecast for two interest rate cuts in 2024, starting in September, despite the Fed’s June dot plot presenting a “hawkish surprise” with a median projection of just one cut in 2024. Goldman Sachs economist David Mericle highlighted that Jerome Powell noted the cumulative progress on inflation, which has fallen from a peak of 7% to 2.7%.

May's inflation report, released on Jun. 12, showed a cooler-than-expected rise in consumer prices, boosting confidence in the Fed’s ability to steer the annual price index variation back toward its 2% target. The headline inflation rate decelerated to 3.3% year-over-year in May 2024, down from the previous and forecasted 3.4%. The flat monthly reading of the overall Consumer Price Index basket is particularly encouraging.

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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote