Atlanta Fed Chief Bostic suggests rate cuts are imminent but advocates caution
The Federal Reserve building is seen in Washington, US
Federal Reserve Bank of Atlanta President Raphael Bostic on Wednesday indicated that with inflation falling further and the unemployment rate rising more than he had expected, it might be "time to move" on rate reductions. However, he stressed the need for caution before taking action. Bostic mentioned he would want confirmation from the upcoming monthly jobs report and two inflation reports before the Fed's September 17-18 meeting to ensure the economic trends continue.
"I don't want us to be in a situation where we cut, and then we have to raise rates again: that would be a very bad outcome," he said at an event hosted by the Stanford Club of Georgia and the Stanford Black Alumni Association–Atlanta, noting it would erode people's confidence in the Fed.
"If I'm going to err on one side, it's going to be waiting longer just to make sure that we don't have that up and down."
The Fed has kept its policy rate in the 5.25 per cent-5.50 per cent range for more than a year to combat high inflation. Last week, Fed Chair Powell mentioned "the time has come" to lower borrowing costs, given the significant easing of price pressures and a cooling labour market.
For much of this year, Bostic had anticipated that the Fed would need to reduce rates just once in 2024, likely in the fourth quarter. Recently, he has shown a greater openness to starting sooner.