Fed’s Bostic Doesn’t Rule Out Another Jumbo Rate Cut

Raphael Bostic, the President of the Federal Reserve Bank of Atlanta, believes that the Fed should be prepared to make larger interest rate cuts if the job market weakens. He reassured markets that his business contacts don’t anticipate layoffs, but this statement seems out of place given the recent ISM data showing a decline in employment within the US manufacturing sector.

Key Quotes:

Recent PCE data indicates that inflation is still decreasing.

Businesses haven’t expressed concerns about layoffs.

Bostic will closely monitor upcoming job data.

If job growth falls significantly below 100,000 jobs, it will raise questions about the economy.

Bostic remains cautious about inflation due to the core PCE price index remaining at 2.7%.

His baseline scenario is for a gradual easing of interest rates as inflation continues to decline and the job market remains stable.

Bostic is open to another significant rate cut if the labour market unexpectedly weakens.