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FED: Atlanta's Bostic Sees 2 2025 Cuts Amid Slowing Jobs Market, Tariff Risks

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Atlanta Fed President Bostic confirms that he's still looking for 2 rate cuts this year, a standpoint that he had more or less implied in previous commentary. "My outlook for this year still has two rate cuts in it. I do think the uncertainty around that is pretty significant," he told reporters on a call. "While that's my baseline expectation, there's a lot that's going to happen that could influence that in both directions." 

  • He also said that policy is currently in "moderately restrictive territory", repeating his neutral estimate at 3-3.5%.
  • The comments come following publication of an essay ("Uncertainty Calls for Caution, Humility in Policymaking") Interestingly in that essay he notes increasing signs of a slowing labor market - alongside "threats" to price stability: "I view the employment outlook as stable, but signs of slowing are accumulating." On the "clear softening" in the labor market, Bostic points to shrinking sectoral breadth in job gains, a lower quits rate, and longer-lasting unemployment, among other indicators.
  • On inflation: "I think inflation in the coming months will continue a bumpy course toward the Committee's 2 percent objective", but "very simply, uncertainty is up across the board...contacts are concerned that tariffs could increase costs.... [and] expressed concern that mass deportations could reduce the labor supply."
  • Bostic also tells reporters that a "more cautious" approach on QT is "prudent", in light of the January FOMC meeting minutes suggesting that there could be a pause or slowdown in runoff until Congress lifts the debt limit:
  • "We've reduced the balance sheet by a considerable amount from the pandemic at emergency levels, and we know that there's going to be a point where we're going to be in an ample reserves environment, and we want to make sure that we don't overshoot or mess that up. We're trying to not create volatility in money markets... it's only prudent that we become more cautious as we get closer to levels that might be consistent with going too far."
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Atlanta Fed President Bostic confirms that he's still looking for 2 rate cuts this year, a standpoint that he had more or less implied in previous commentary. "My outlook for this year still has two rate cuts in it. I do think the uncertainty around that is pretty significant," he told reporters on a call. "While that's my baseline expectation, there's a lot that's going to happen that could influence that in both directions." 

  • He also said that policy is currently in "moderately restrictive territory", repeating his neutral estimate at 3-3.5%.
  • The comments come following publication of an essay ("Uncertainty Calls for Caution, Humility in Policymaking") Interestingly in that essay he notes increasing signs of a slowing labor market - alongside "threats" to price stability: "I view the employment outlook as stable, but signs of slowing are accumulating." On the "clear softening" in the labor market, Bostic points to shrinking sectoral breadth in job gains, a lower quits rate, and longer-lasting unemployment, among other indicators.
  • On inflation: "I think inflation in the coming months will continue a bumpy course toward the Committee's 2 percent objective", but "very simply, uncertainty is up across the board...contacts are concerned that tariffs could increase costs.... [and] expressed concern that mass deportations could reduce the labor supply."
  • Bostic also tells reporters that a "more cautious" approach on QT is "prudent", in light of the January FOMC meeting minutes suggesting that there could be a pause or slowdown in runoff until Congress lifts the debt limit:
  • "We've reduced the balance sheet by a considerable amount from the pandemic at emergency levels, and we know that there's going to be a point where we're going to be in an ample reserves environment, and we want to make sure that we don't overshoot or mess that up. We're trying to not create volatility in money markets... it's only prudent that we become more cautious as we get closer to levels that might be consistent with going too far."