Atlanta Fed president "There is not a strong need for additional rate cuts right now"

Bostic: "Inflation concerns remain... cautious on additional cuts in October"

"Labor market is not in crisis"... forecasts core inflation 3.1%, unemployment rate 4.5%

Impact of immigration restrictions begins to show... "Labor supply constraints will deepen"

Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said that while the risk to employment has recently increased, inflation concerns remain larger, so he would be cautious about additional rate cuts in October.

In an interview with the Wall Street Journal (WSJ) on the 22nd (local time), Bostic said that at last week’s Federal Reserve meeting he expected only one rate cut in 2025. Since a rate cut was already made last week, this means it is likely there will be no further cuts at the two remaining meetings this year.

He said, "I worry that inflation has stayed too high for too long," and "If it were today, I would not support (an additional cut)." The Fed’s next regular Federal Open Market Committee (FOMC) meeting will be held on October 28–29.

Bostic had also expected only one rate cut at the June meeting. He explained that he agreed to the rate cut last week because the risk of an employment slowdown had increased, somewhat lowering the priority on inflation.

The 12 regional Fed presidents under the Federal Reserve can speak at meetings, but voting rights rotate. Bostic does not have a vote on the FOMC this year.

Last year, amid concerns that slowing inflation and that high interest rates could unnecessarily shock the labor market, the Fed cut the policy rate by a total of 1% percentage point from a 20-year high.

Bostic described the current situation as "one of the most difficult times for policymakers," diagnosing that "high inflation and the risk of economic slowdown are both increasing." He said, "I do not view the labor market as being in crisis," but added that it is difficult to judge exactly how weak it is.

According to his forecast, core inflation will reach 3.1% by year-end (up from 2.9% in July), and the unemployment rate will rise to 4.5%. He expects a return to the 2% target by 2028.

He also explained that the cost increases from tariffs have been milder than expected due to firms adjusting their pricing strategies. However, he warned that as this buffer is exhausted, even if an immediate spike is avoided, medium-term inflationary pressures could persist. He added, "How changes in cost structures will be reflected in final consumer prices has not yet fully emerged."

Bostic estimated that about one-third of the recent employment slowdown is due to labor supply constraints. Legally admitted immigrants face about a one-year lag before receiving work authorization, so immigrants who entered last year have not yet fully entered the labor market.

He said, "Labor supply constraints will become more severe," and predicted that next year the effects of immigration restriction policies will fully show up in the labor market.

New York = Shin-young Park, correspondent nyusos@hankyung.com