{"id":12316,"date":"2024-08-15T18:50:47","date_gmt":"2024-08-15T18:50:47","guid":{"rendered":"https:\/\/topat10.com\/?p=12316"},"modified":"2024-08-15T18:50:47","modified_gmt":"2024-08-15T18:50:47","slug":"top-fed-official-says-hes-open-to-a-rate-cut-in-september-because-the-central-bank-cant-afford-to-be-late","status":"publish","type":"post","link":"https:\/\/topat10.com\/?p=12316","title":{"rendered":"Top Fed official says he\u2019s open to a rate cut in September because the central bank can\u2019t \u2018afford to be late\u2019"},"content":{"rendered":"\n<p>Inflation is cooling and at least one Federal Reserve official said he is \u201copen\u201d to rate cuts at the central bank\u2019s <a href=\"https:\/\/fortune.com\/2024\/08\/05\/fed-powell-market-upset-september-rate-cut\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/08\/05\/fed-powell-market-upset-september-rate-cut\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">next meeting in September<\/a>.<\/p>\n<div>\n<p>Raphael Bostic, President of the Atlanta Fed and a voting member of the Federal Open Market Committee, which determines monetary policy, told the<a href=\"https:\/\/www.ft.com\/content\/8f5dbc26-761f-4e9c-a183-620a05001fff\" target=\"_blank\" aria-label=\"Go to https:\/\/www.ft.com\/content\/8f5dbc26-761f-4e9c-a183-620a05001fff\" rel=\"noopener\" class=\"sc-93594058-0 fowfrQ\"> <em>Financial Times<\/em><\/a> he was open to cutting interest rates before the fourth quarter.<\/p>\n<p>The consumer price index, the primary measure to track inflation, <a href=\"https:\/\/fortune.com\/2024\/08\/14\/inflation-consumer-price-index-3-year-low-fed-interest-rates\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/08\/14\/inflation-consumer-price-index-3-year-low-fed-interest-rates\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">fell below 3% in July year-over-year<\/a> for the first time since early 2021, the Labor Department said Wednesday. That means inflation is inching closer to the Fed\u2019s 2% target, the long-term average inflation rate the central bank aims to hit over time. The core inflation rate, which excludes volatile food and energy items and is used to gauge price pressures in the economy, was also at its lowest point in three years, a sign that prices are rising more slowly.\u00a0<\/p>\n<p>At the same time, the unemployment rate <a href=\"https:\/\/fortune.com\/2024\/08\/02\/unemployment-hiring-jobs-report-july\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/08\/02\/unemployment-hiring-jobs-report-july\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">jumped<\/a> to 4.3% in July, with the U.S. adding fewer jobs compared to June and tens of thousands of jobs fewer than forecasters expected. The slowdown in job creation and weaker job growth could be signs of softening in the labor market.\u00a0<\/p>\n<p>Although the timing of when to lower interest rates is a delicate balance, Bostic said waiting to cut rates is risky. Cutting rates too soon could trigger inflation, while waiting could potentially slow the economy. Accordingly, the timing is crucial to avoid an economic hit in either scenario.<\/p>\n<p>\u201cWaiting does bring risk, and that\u2019s why we have to be extra vigilant on this,\u201d he told the <em>FT<\/em>. \u201cBecause our policies act with a lag in both directions, we can\u2019t really afford to be late. We have to act as soon as possible.\u201d<\/p>\n<p>The Atlanta Fed president previously supported a rate cut closer to the end of the year, but he acknowledged that recent positive inflation numbers have shifted his thinking.<\/p>\n<p>\u201cWe\u2019ve been saying for a long time that we want to see the numbers come in to give us more confidence that we\u2019re sustainably on the path to 2% and I have to say, the numbers that have come in in the last several months have given me greater confidence that we\u2019re sustainably on that path,\u201d Bostic said.<\/p>\n<p>Under its <a href=\"https:\/\/fortune.com\/2024\/06\/05\/federal-reserve-soft-landing-inflation-prices\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/06\/05\/federal-reserve-soft-landing-inflation-prices\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">\u201cdual mandate,\u201d<\/a> the Fed is in charge of both keeping prices stable by hedging inflation and fostering maximum sustainable employment. While Bostic described the labor market as \u201cweakening but not weak,\u201d he said it\u2019s time to shift the Fed\u2019s focus onto rising unemployment.\u00a0<\/p>\n<p>\u201cNow that inflation is coming into range, we have to look at the other side of the mandate, and there, we\u2019ve seen the unemployment rate rise considerably off of its lows,\u201d Bostic said.<\/p>\n<p>After the unwinding of the <a href=\"https:\/\/fortune.com\/2024\/08\/06\/japan-carry-trade-yen-explainer-stock-market-wall-street\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/08\/06\/japan-carry-trade-yen-explainer-stock-market-wall-street\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">yen carry trade<\/a> shocked markets and <a href=\"https:\/\/fortune.com\/2024\/08\/12\/stock-market-outlook-6-months-recovery-selloff-yen-carry-trade-recession\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/08\/12\/stock-market-outlook-6-months-recovery-selloff-yen-carry-trade-recession\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">saw major indexes end the week down,<\/a> rumblings of a September rate cut have led the S&amp;P 500 to five straight days of gains. Traders are now speculating whether the Fed <a href=\"https:\/\/fortune.com\/2024\/08\/14\/fed-rate-cut-looms-a-september-slash-is-expected-but-the-size-of-the-cut-is-unknown\/\" target=\"_self\" aria-label=\"Go to https:\/\/fortune.com\/2024\/08\/14\/fed-rate-cut-looms-a-september-slash-is-expected-but-the-size-of-the-cut-is-unknown\/\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">will cut by a quarter or a half of a percentage point<\/a>.<\/p>\n<p>Bostic was noncommittal about how much the Fed should cut rates but said if the labor market weakens faster than expected, then \u201ceverything is on the table.\u201d He noted that he didn\u2019t expect that to happen, necessarily.\u00a0<\/p>\n<p>\u201cIf we see that there is disruption that\u2019s happening that suggests that labor markets are going to collapse \u2014 or might [collapse] \u2014 I would very much support moving more assertively to minimize the amount of that pain,\u201d Bostic told the <em>FT<\/em>.<\/p>\n<\/div>\n<div data-cy=\"subscriptionPlea\"><strong>Recommended Newsletter: <\/strong>CEO Daily provides key context for the news leaders need to know from across the world of business. Every weekday morning, more than 125,000 readers trust CEO Daily for insights about\u2013and from inside\u2013the C-suite. <a href=\"https:\/\/www.fortune.com\/newsletters\/ceo-daily?&amp;itm_source=fortune&amp;itm_medium=article_tout&amp;itm_campaign=finance\" target=\"_self\" aria-label=\"Go to https:\/\/www.fortune.com\/newsletters\/ceo-daily?&amp;itm_source=fortune&amp;itm_medium=article_tout&amp;itm_campaign=finance\" class=\"sc-93594058-0 fowfrQ\" rel=\"noopener\">Subscribe Now<\/a>.<\/div>\n\n","protected":false},"excerpt":{"rendered":"<p>Inflation is cooling and at least one Federal Reserve official said he is \u201copen\u201d to rate cuts at the central bank\u2019s next meeting in September. Raphael Bostic, President of the Atlanta Fed and a voting member of the Federal Open Market Committee, which determines monetary policy, told the Financial Times he was open to cutting [&hellip;]<\/p>\n","protected":false},"author":329,"featured_media":12317,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[123],"tags":[],"class_list":["post-12316","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Top Fed official says he\u2019s open to a rate cut in September because the central bank can\u2019t \u2018afford to be late\u2019 | Unlock Informed Choices with Us<\/title>\n<meta name=\"description\" content=\"Atlanta Fed President 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