Fed Pres. Bostic: Is open to another 50 bp cut if labor market shows continued weakness

• Bostic Is open to another 50 basis point cut of labor market shows continued weakness.
• Baseline cases for an orderly easing with inflation and expected to continue slowing and job market to hold up.
• He does not want to get overconfident on inflation given core personal consumption expenditures price index remains at 2.7%.
• He will be watching incoming jobs stated closely if employment growth slows much below 100 K jobs it would warrant closer questioning of what is happening.
• Business contacts continue to say they do not expect layoffs.
• Recent PCE data shows disinflation still on track.
• Baseline outlook involves gradual Fed easing over 15 months, targeting a policy rate of 3.00%-3.25% by the end of 2025.
• He currently supports one additional 0.25% rate cut this year, pending upcoming inflation and labor market data.

The end of 2025 rate of 3% – 3.2% versus the end of 2025 Fed projection of 3.4% . However, the 25 basis point additional rate cut this year is well below what the market is expecting and even the 50 basis point expected by the Fed’s dot plot.

This article was written by Greg Michalowski at www.forexlive.com.