Atlanta Fed President Bostic said on Wednesday that as inflation continues to decline and the unemployment rate rises more than he expected, it may be time to take action to cut interest rates, but he still hopes to see more data supporting rate cuts before pulling the trigger.
Bostic said he hopes to see the non farm payroll report and two inflation reports released before the Federal Reserve meeting on September 17-18 confirm that the economic trend is still ongoing.
The US Department of Labor will release the August non farm payroll report next Friday (September 6). In addition, the July Personal Consumer Expenditure (PCE) data for the United States will be released this Friday, and the August Consumer Price Index (CPI) will be released on September 11th.
I don't want us to fall into a situation where we have to cut interest rates and then have to raise them again: that would be a very bad outcome because it would weaken people's confidence in the Federal Reserve, "Bostic said at an event on Wednesday.
If I were to make a mistake in one direction, it would be to wait longer to ensure that we do not experience fluctuations in (interest rates)
For most of this year, Bostic has stated that he expects the Federal Reserve to only cut interest rates once this year, possibly in the fourth quarter. In recent weeks, he has hinted that his expected schedule for interest rate cuts has been advanced.
Bostic has the right to vote on monetary policy this year.
For over a year, the Federal Reserve has maintained its policy rate in the range of 5.25% -5.50% to curb high inflation.
Last week, Federal Reserve Chairman Powell stated at the Jackson Hole Global Central Bank Annual Meeting that given the significant easing of price pressures and the cooling of the labor market, the "time has come" to lower borrowing costs. This has increased people's expectations for the Federal Reserve to cut interest rates at its September policy meeting.
Powell did not disclose how quickly officials will take action, but stated that "the timing and speed of interest rate cuts will depend on future data, constantly changing prospects, and risk balance." He emphasized that officials do not want to see further weakness in the labor market.