Bostic Suggests "Move and See" Over "Wait and See"... Is Monetary Easing Gaining Ground Within the Fed?

Atlanta Fed President in Bloomberg Interview
"Move First and Wait"

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, indicated the possibility of an imminent rate adjustment, while emphasizing the need for a cautious approach until the economic outlook becomes clearer. Instead of the Federal Reserve's traditional "wait and see" stance, he mentioned a "move and see" strategy. As internal debate continues within the monetary authorities between advocates for easing and those urging caution regarding the path of interest rates, attention is increasingly focused on the policy discussions and the rate decision scheduled for September.

Raphael Bostic President of the Federal Reserve Bank of Atlanta Reuters Yonhap News

According to Bloomberg News on August 17 (local time), President Bostic said in an interview in Red Bay, Alabama, on August 14, "I think the strategic approach right now is to move first and wait," adding, "It may take time after we take action for the economy to change and for it to become clear what the next necessary step will be." This is interpreted as a departure from the Fed's previously cautious, wait-and-see approach, suggesting that it may be appropriate to lower rates preemptively and then observe the subsequent developments.

With calls for rate cuts gaining momentum amid a recent slowdown in the labor market and limited inflation, President Bostic's remarks are further heightening interest in the September Federal Open Market Committee (FOMC) meeting. While he left open the possibility of a rate cut later this year, he clarified, "I will not insist on a specific timing."

President Bostic also referred to inflation risks stemming from tariffs, but stated it remains to be seen whether these will be one-off shocks or develop into long-term factors. He pointed out, "Tariffs are a real cost," adding, "Many companies are absorbing some of the impact to protect consumers, but they cannot do so forever. Time is running short."

Additionally, President Bostic noted, "Individual committee members may ultimately reach the same conclusion, but the grounds for their decisions may differ," predicting that intense debate over rate cuts and the future policy path will be inevitable at the September FOMC meeting. However, he does not have a vote in this year's FOMC and thus will not directly participate in the actual policy decision.

Recently, calls for rate cuts have emerged within the Fed. Vice Chair Michelle Bowman and Governor Christopher Waller both advocated for rate cuts at the July meeting, casting dissenting votes against the majority decision to hold rates steady. This marks the first time in 32 years that there have been multiple dissenting votes on a Fed rate decision. Notably, Vice Chair Bowman recently stated at a separate event that the Fed should cut rates at all three remaining FOMC meetings this year.

On the other hand, caution remains. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, recently cited rising service prices and warned, "Making abrupt moves is the last thing the Fed should do."

In the market, a September rate cut is already being taken as a given. According to the CME FedWatch Tool, as of this date, the probability that the Fed will lower the current 4.25-4.5% rate by 0.25 percentage points in September stands at 84.6%. The probability of holding rates steady is reflected at 15.4%, while the likelihood of a big cut (a 0.5 percentage point reduction) is 0%.

Given the ongoing disagreements within the Fed over the magnitude and pace of rate cuts, inflation and employment data to be released just before the September FOMC are expected to be a key turning point for future policy direction. Clues about the rate path may also emerge from the scheduled speech by Fed Chair Jerome Powell at the Jackson Hole meeting to be held August 21-23.

This content was produced with the assistance of AI translation services.