Federal Reserve Boston: Considering rate cuts, but seeking more data

Atlanta Fed President Bostic said, "Now" it "may be time" to consider a rate cut, but he is still seeking more data to support the need to lower rates next month.

Bostic reiterated that due to inflation falling faster than expected and the unemployment rate rising faster, he has advanced the timetable for expected rate cuts. However, he remains cautious.

Speaking at an event organized by the Georgia Stanford Club and the Atlanta Stanford Black Alumni Association, Bostic said, "I don't want us to be in a situation where we cut rates and then have to raise them again."

He added, "If I were to lean one way, it would be to wait longer just to make sure we don't have a situation of back and forth." But he emphasized that this is not his baseline expectation.

Fed Chairman Powell said last week, "Now is the time" for officials to consider lowering rates, strengthening market expectations for a rate cut at the Fed's policy meeting on September 17-18.

Speaking at the Fed's annual meeting in Jackson Hole, Wyoming, Powell did not specify how quickly officials would act, saying, "The timing and pace of any rate cuts will depend on incoming data, evolving risks, and the balance of risks."

He expressed confidence in the path for inflation to return to 2% and noted that officials do not want to see further weakness in the labor market.

In an interview in Jackson Hole, Bostic began to adjust his stance, having previously leaned towards only one 25 basis point rate cut by the end of 2024.

Bostic said on Wednesday that the upcoming inflation and employment reports will be important indicators for policymakers to assess whether the trends are still continuing.

Officials will receive a new inflation reading with the personal consumption expenditures price index on Friday and the latest employment update with the release of the August jobs report by the Labor Department on September 6