Fed’s Bostic sees gradual easing, possible dramatic cuts if job growth falter

In an interview with Reuters overnight, Atlanta Fed President Raphael Bostic outlined his expectations for a gradual, “orderly” easing of monetary policy over the next 15 months. His baseline scenario sees policy rate falling to a range of 3.00% to 3.25% by the end of 2025, a level he considers neutral for the economy.

However, Bostic cautioned that a “much weaker” labor market could accelerate the pace of rate cuts. He emphasized that significant job market deterioration would “add urgency” to Fed’s easing process, prompting another “dramatic move” such as the 50bps rate cut enacted in September.

Bostic also noted his close attention to job growth, stating that as long as the economy continues to produce net jobs and monthly job creation stays above 100,000, the labor market will likely remain on stable footing. This threshold, in Bostic’s view, is the minimum needed to absorb new entrants into the labor force.