In an essay, Atlanta Fed President Raphael Bostic anticipates that gradual slowdown in the labor market and overall economic activity will lead to inflation decreasing to the target level of 2% by 2025, or slightly later.
Bostic mentioned that instead of maintaining the federal funds rate until the inflation target is achieved, he would prefer to start reducing the policy rate once there is clear evidence that inflation is on a definitive path towards the 2% objective.
Taking all factors into account, Bostic stated, “I continue to believe conditions will likely call for a cut in the federal funds rate in the fourth quarter of this year.”
However, he emphasized flexibility, indicating that he is “not locked into any particular policy path” and that adjustments will be based on evolving data and economic conditions.
Bostic acknowledged the possibility of varying scenarios, including more cuts, no cuts, or even a rate increase, depending on how the situation develops. “I will let the data and conditions on the ground be my guide,” highlighting the importance of data-driven decision-making in monetary policy.
Full essay of Fed’s Bostic here.
