It could see another jumbo cut if the job market deteriorates

Federal Reserve (Fed) Bank of Atlanta President Raphael Bostic noted on Tuesday that the Fed should be willing to explore more interest rate cuts if the labor market deteriorates. The Fed’s Bostic also assured markets that his business contacts continue to say they don’t expect layoffs, an ill-timed soundbite that comes on the back of ISM data on Tuesday morning that showed a deterioration in the employment outlook for work in the US manufacturing space.

Key highlights

Recent PCE data shows that disinflation is still on track.

Business contacts continue to say they don’t expect layoffs.

Will keep a close eye on future job data.

If employment growth slows well below 100,000 jobs, it would warrant a closer questioning of what’s going on.

He doesn’t want to get too bullish on inflation, given that the Core Price Index for Personal Consumption Expenditures remains at 2.7%.

The case is for an “orderly” easing, with inflation expected to continue to slow and the labor market to hold up.

Bostic is open to another rate cut of half a percentage point if the labor market shows unexpected weakness.