Bostic signals rate cuts amid persistent inflation concerns

Atlanta Federal Reserve President Raphael Bostic indicated a shift in focus towards employment concerns, suggesting that interest rates could be lowered despite inflation remaining above the Fed's target. He emphasized the importance of not waiting for inflation to reach 2% before easing restrictions, as this could lead to disruptions in the labor market. The Fed's preferred inflation measure was reported at 2.5% in July, with a core rate of 2.6%. Bostic's comments come ahead of the Federal Open Market Committee meeting scheduled for September 17-18, where a rate cut is widely anticipated. As a voting member of the FOMC, his views are influential, especially as economists predict a slowdown in the labor market. Bostic noted that while there is no immediate panic among business leaders, there are signs of a cooling economy, which is contributing to a decline in inflation. He highlighted that the moderation in the labor market is positively impacting inflation rates, leading him to reassess his priorities regarding the Fed's dual mandate. This marks a significant change in Bostic's stance, reflecting broader economic trends and the need for a balanced approach to monetary policy.