FEDERAL Reserve Bank of Atlanta President Raphael Bostic on Wednesday said that with inflation down farther and the unemployment rate up more than he anticipated, it may be “time to move” on rate cuts, but he wants to be sure before pulling that trigger.
Bostic said he will want to see confirmation from the monthly jobs report and two inflation reports due before the Fed’s Sept 17-18 meeting that the economic trends are continuing.
“I don’t want us to be in a situation where we cut, and then we have to raise rates again: that would be a very bad outcome” because it would undermine people’s confidence in the Fed, he said at an event organised by the Stanford Club of Georgia and the Stanford Black Alumni Association–Atlanta.
“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.”
The Fed has kept its policy rate in the 5.25 to 5.50 per cent range for more than year to bring down high inflation.
Last week, Fed Chair Powell said “the time has come” to reduce borrowing costs, given that price pressures have eased considerably and the labour market has cooled.
For much of this year, Bostic had said he expected the Fed would need to cut rates just once this year, likely in the fourth quarter. In recent weeks he has signalled his openness to starting earlier. REUTERS
