“Time to Move on Rate Cuts, But with Caution” – By Reuters

Federal Reserve Bank of Atlanta President Raphael Bostic stated on Wednesday that, given the recent drop in inflation and an increase in the unemployment rate beyond his expectations, it may be time to consider rate cuts. However, he emphasized the need for caution before making any decisions.

Bostic indicated that he will look for confirmation from the upcoming monthly jobs report and two inflation reports set to be released before the Fed’s meeting on September 17-18, which will help determine whether the current economic trends are sustainable.

He expressed concern about the possibility of cutting rates only to have to raise them again later, which he believes would negatively impact public confidence in the Federal Reserve. “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,” Bostic remarked during an event hosted by the Stanford Club of Georgia and the Stanford Black Alumni Association–Atlanta.

The Federal Reserve has maintained its policy interest rate in the range of 5.25%-5.50% for over a year to combat high inflation. Recently, Fed Chair Powell suggested that the moment to decrease borrowing costs has arrived, citing a significant easing of price pressures and a cooling labor market.

Earlier this year, Bostic had anticipated that the Fed would likely need to implement only one rate cut this year, probably in the fourth quarter. However, he has recently indicated a willingness to contemplate an earlier reduction.