US rate setter tells BBC 'no hurry' to cut interest rates

A key member of the Federal Reserve, the US central bank, has told the BBC that inflation is only coming down "very, very slowly" and "let's not be in a hurry" on interest rate cuts.

Raphael Bostic, the President of the Atlanta Federal Reserve, told BBC News that US interest rates will have to be kept at a "restrictive level" and might only ease "at the end of 2024".

Expectations of a delay to US interest rate cuts has sent reverberations around the world economy in recent weeks, impacting government borrowing costs, including in the UK.

At the beginning of the year, markets expected a series of rate cuts in the US and across Europe.

The Chancellor Jeremy Hunt told reporters on the sidelines of the International Monetary Fund (IMF) Spring Meeting that "what happens in the US has a knock-on impact in the UK… inflation coming in slightly above expectations in the US has had some impact on market yields in the UK".

Those changes in the market for government debt can feed through to higher mortgage and business borrowing costs. The Governor of the Bank of England Andrew Bailey was at pains to say in Washington that the pattern of UK inflation was different to what was occurring in the US.

Mr Bostic, who casts one of the votes to decide US interest rates, said the American economy was creating lots of jobs and performing well: "I've been saying for a long time that I expect the US economy to be strong, to continue to be strong, but not quite this strong, it is much stronger and more resilient than I have expected."

The strength in the US economy was keeping inflation higher than expected, he said: "Let's be patient, let's not be in a hurry [on rate cuts], especially since there's so much good stuff that's happening on the employment side".

He also expressed some concern about US government debts, on course to hit a record, with little sign of either main Presidential election candidate addressing the issue: "Maybe we should be having a conversation about, are we undermining the confidence in the full faith and credit of the US government, because we really can't afford to do that".

He also said that while the US dollar's role as the world's number one reserve currency was "safe today" he thought that "everyone has to do things to make sure safety occurs. When we ride a bus or a car or plane, we put on a seatbelt".