Fed's Bostic Sees Large Rate Cut Bolstering Labor Market

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Bloomberg Sep 24 07:44 · 36.9k Views

Federal Reserve Bank of Atlanta President Raphael Bostic says a large move to start the central bank's cutting cycle will help bring interest rates closer to neutral levels as the risks between inflation and employment become more balanced.

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Transcript

  • 00:00 Now, my residual concern about inflation might have led me to settle on a relatively small first move last week,
  • 00:07 say 25 basis points.
  • 00:09 But such a move would belie growing uncertainty about the trajectory of the labor market
  • 00:15 that I have already noted.
  • 00:18 Now, for sure, the labor market is not yet flashing red for me,
  • 00:22 and I want to be clear that I do not believe the labor that labor markets have
  • 00:27 weakened in a dangerous way.
  • 00:29 That is not what the data show,
  • 00:31 nor what business leaders tell us.
  • 00:34 Now, there's plenty of debate about the level of the neutral, neutral rate in the United States and elsewhere,
  • 00:40 and it's unfortunately one of those concepts that is easier to see after the fact than before.
  • 00:47 However,
  • 00:49 any disagreement on the true level of neutral was inconsequential,
  • 00:53 at least for me at last week's meeting.
  • 00:57 Wherever the neutral rate is,
  • 00:59 I don't know anyone who would plausibly argue with the notion that we are a fair distance above it.