04/09/2024 – 12:37
Atlanta Federal Reserve Bank President Raphael Bostic has signaled that he is ready to start cutting interest rates and that a tight policy stance will not be maintained for long. In a statement published on the institution’s website, he stressed that the Fed cannot wait until inflation falls to 2% to begin removing the restriction.
“This would risk disruptions to the labor market that could inflict unnecessary pain and suffering,” he said.
Bostic said he doesn’t see an “imminent collapse or panic among business contacts,” but noted that the data depicts an economy and labor market that is losing steam. “The silver lining is that the slowdown in activity is fueling a continued and welcome decline in the pace of inflation,” he stressed.
The president of the Federal Reserve of Atlanta also stated that, given the recent cooling of the labor market, he now gives equal attention to employment and inflation objectives.
In the text published on the institution’s website, Bostic points out that the slowdown in the labor market in recent months has changed the balance of risks. However, he emphasizes that although the sector has weakened, it is not weak and is “stable”.
The leader mentions that, although the unemployment rate has increased, it is only slightly higher than expected.
Bostic says another important metric to consider about the labor market is the hiring rate, which has fallen back to near its pre-pandemic trend.
“Given these data, it is not surprising that the previously huge gap between high demand for labor and low labor supply has narrowed from more than 5 million at the beginning of 2023 to less than 1.5 million in June,” he explains.
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