Atlanta Fed President Bostic Urges Officials to Act on Inflation Before Hitting 2% Target
Atlanta Federal Reserve President Raphael Bostic suggested on Wednesday that he is prepared to begin lowering Interest rates despite ongoing Inflation exceeding the Central bank‘s target. Previously considered a more hawkish policymaker, Bostic emphasized a shift towards focusing on the employment aspect of the Fed’s mandate due to indications of a softening labor market.
“I believe we cannot wait until Inflation has actually fallen all the way to 2 percent to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering,” Bostic stated in a message on the Atlanta Fed’s website. The Fed’s preferred measure showed Inflation at a 2.5% rate in July, with a slightly higher core rate of 2.6% when excluding food and energy.
Although Bostic did not specify the amount or timing of rate cuts, market expectations already predict the Federal Open Market Committee’s decision to lower the benchmark borrowing rate by at least a quarter percentage point during its upcoming meeting on Sept. 17-18. As an FOMC voting member this year, Bostic’s stance carries significant weight, reinforcing the likelihood of the Fed’s first easing since the early days of the Covid crisis.
Bostic’s remarks precede an anticipated nonfarm payrolls report, with concerns over a potential labor market slowdown. Despite noting a lack of impending panic among business contacts, Bostic highlighted data indicating an economy and labor market losing momentum, leading to a welcome decline in Inflation pace. He emphasized a focus on both sides of the Fed’s dual mandate due to eroding pricing power and a cooling labor market, signaling a reevaluation of priorities in light of current circumstances.
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Lucas Bennett, completed his Finance degree at Bocconi University in Italy in 2018. He is highly skilled in corporate finance and risk management, beginning his career at a hedge fund in Milan. Lucas expertise extends to consulting for leading European firms, particularly within the energy markets sector. His analytical skills and strategic mindset have made him a sought-after consultant, and he continues to explore new opportunities within the financial services industry across Europe.