Nuthawut Somsuk
Federal Reserve President Raphael Bostic is open to a rate cut next month, adding that the central bank cannot afford to be late with monetary easing, according to an interview with the Financial Times.
“Now that inflation “When we get into the area, we have to look at the other side of the mandate, and there we have seen that the unemployment rate has risen considerably from its lows,” said Bostic, a voting member of the Federal Open Market Committee.
“But I’m thinking about when the time is right, so I’m open to something happening to get us moving before the fourth quarter.”
Bostic pointed out the risk of waiting to cut interest rates. “Because our policy has a lagging effect in both directions, we actually cannot afford to be late. We have to act as quickly as possible.”
Just a few days ago, he said he needed “a little bit more” data before he could support rate cuts. Bostic’s change of course comes as the year-on-year increase in the consumer price index fell below 3% for the first time since March 2021, which he called a “very, very positive sign.”
Other Fed officials also tend to support a September rate cut. The probability of a 25 basis point cut next month is 70.5 percent, according to the CME FedWatch tool, and 29.5 percent for a 50 basis point cut. For comparison, a week ago the probability of a 25 basis point cut was 49 percent and a 50 basis point cut was 51 percent.
