Atlanta Federal Reserve Bank President Raphael Bostic said Wednesday that with inflation lower than he expected and unemployment higher than he expected, it may be time to move toward lowering interest rates, but he wants to be sure before starting the process.
Bostic said he would want to see confirmation from the monthly jobs report and two inflation reports due before the Fed's Sept. 17-18 meeting that the economy is in a stable state.
“I don’t want to be in a situation where we cut rates and then have to raise them again,” the Fed member said at an event organized by the Stanford Club of Georgia and the Stanford Black Alumni Association in Atlanta. “That would be a very bad outcome because it would undermine people’s confidence in the Fed.”
The Federal Reserve has kept interest rates in a range of 5.25% - 5.50% for more than a year to bring down high inflation.
Timing of interest rate cut
Last week, Fed Chair Powell said it was time to lower borrowing costs, given that price pressures had eased significantly and the labor market was slowing.
In previous comments, Bostic said he expected the Fed to need to cut rates only once this year, likely in the fourth quarter. In recent weeks, he has indicated he is open to starting to cut rates as early as this year.
Powell, speaking at the Fed's annual conference in Jackson Hole, Wyoming, did not provide details on how quickly officials would move, saying the timing and pace of rate cuts would depend on incoming data, evolving expectations and the balance of risks.
He said he was more confident that inflation was on track to 2% and stressed that officials did not want to see any further weakness in the labor market.
During an interview in Jackson Hole, Boucek appeared to shift his stance after previously favoring a quarter-point rate cut by the end of 2024.
On Wednesday, the president of the Atlanta Federal Reserve said upcoming reports on inflation and employment would be important signals for monetary policymakers to make sure the trend they were watching was still ongoing.
Officials are due to get a fresh reading on inflation on Friday when the personal consumption expenditures price index is released, and they will see another update on employment next week when the Labor Department releases its August jobs report on Sept. 6.
