Atlanta Fed President Bostic said officials can’t wait until inflation reaches 2% before cutting interest rates | Wilnesh News

Atlanta Federal Reserve Bank President Raphael Bostic said on Wednesday that he is ready to start cutting interest rates even though inflation remains above the central bank’s target.

Bostic, who has previously been one of the more hawkish policymakers, or has backed tighter policy to combat inflation, noted that as signs of labor market weakness grow, his focus is shifting more to the core of the Fed’s mandate. employment.

“I do not think we can wait until inflation actually falls all the way to 2 percent before we begin to lift restrictions because that would risk labor market disruptions that would create unfavorable economic conditions,” he wrote in a message posted on the Atlanta Fed’s website. Necessary pain and suffering.

The Fed’s preferred indicator showed inflation at 2.5% in July, with the core rate excluding food and energy just above 2.6%. Bostic did not specify how much or when the Fed should begin easing.

However, this letter comes with The market has generally expected The central bank’s Federal Open Market Committee will cut its benchmark borrowing rate by at least 25 percentage points at its meeting on September 17-18.

As a voting member of this year’s Federal Open Market Committee, Bostic’s views carry extra weight and provide further assurance that the central bank will implement the first easing policy since emergency measures were adopted at the beginning of the COVID-19 crisis more than four years ago.

His comments also come two days before a key nonfarm payrolls report is expected, as most economists believe the labor market is losing steam. Bostic said his experience with Atlanta-area business leaders reflects this concern.

“Rest assured, I am not sensing an imminent collapse or panic in business connections. However, the data and our grassroots feedback indicate that the economy and labor market are losing steam,” he said. “The upside of this is that the slowdown in economic activity is driving a sustained decline in inflation, which is welcome.”

In fact, he cited a variety of factors that suggest inflation is moving convincingly back toward the Fed’s target as the labor market slows.

“Given the circumstances we face – eroding pricing power and cooling labor markets – for the first time since early 2021, I am rebalancing our focus to both sides of our dual mandate,” he said.