During the Jackson Hole Symposium, Philadelphia Fed President Harker repeatedly mentioned the need to "calmly" cut interest rates on Thursday and Friday; Chicago Fed President Evans stated that the Fed should not only fight inflation, but also focus more on employment; with monetary policy already quite tight, the economy is not overheating and there is no need to tighten monetary policy; Atlanta Fed President Bostic said that action should not wait until inflation falls completely to 2%, and there may be more than one interest rate cut this year
Using the platform of the Jackson Hole Global Central Bank Annual Meeting, Federal Reserve officials have repeatedly hinted at an imminent rate cut. Apart from the dovish remarks of Federal Reserve Chairman Powell, other officials have either supported the view that the economic environment does not require tightening, or have been outspoken about the need for a rate cut.
Harker Advocates for a "Methodical" Rate Cut for Two Consecutive Days
On August 23rd, the day after the Jackson Hole Annual Meeting, following Powell's speech, Patrick Harker, the President of the Federal Reserve Bank of Philadelphia who will have voting rights at the FOMC meetings in 2026, mentioned a similar view to Powell's: it is time to start cutting rates. He emphasized that the rate cut should be done "methodically".
Harker mentioned that contacts in the Philadelphia Fed district told him that once the rate cut begins, it should not be done in a stop-and-go manner. Harker said:
"I like the word 'methodical'... We should start this process and then keep going."
Harker stated that he did not see a "serious" risk of a sudden increase in the unemployment rate, and Fed officials expect the unemployment rate not to rise above 5%. Harker projected that by the end of the rate cut cycle, where rates are neither stimulating economic growth nor slowing it down, the interest rate could be around 3%. This implies that Harker expects the Fed to cut rates by more than 200 basis points in total.
Wall Street Journal previously mentioned that on the first day of the Jackson Hole Annual Meeting, this past Thursday, Harker proposed a "methodical" rate cut. Regarding the magnitude of the rate cut in September, Harker said he needs to see a few more weeks of data to determine. He also warned that it is better to focus on the prospect of a steady easing of monetary policy rather than a specific rate cut magnitude, as any specific rate cut magnitude is less important than the overall range of rate cuts.
It is worth noting that in terms of wording, Powell's dovish inclination expressed on Friday may still exceed Harker's. A report contributed by journalist Nick Timiraos from the "New Fed News Agency" pointed out that some Fed officials have recently used words like "gradual" and "methodical" to subtly suggest an expected series of 25 basis point rate cuts. Powell completely avoided using such words on Friday, which opens the door to a larger rate cut in the coming weeks if there are signs of more serious weakness in the labor market.
Goolsbee: It's Time to Focus More on Employment, Monetary Policy is Already Quite Tight
Also following Powell's speech, Austan Goolsbee, the President of the Federal Reserve Bank of Chicago who will have voting rights at FOMC meetings in 2025, stated on Friday that inflation in the United States is currently trending towards the Fed's target of 2%, and it is time to pay more attention to the employment aspect of the Fed's dual mandate. Goolsbee said:
"As Chairman Powell mentioned, we (the Fed) also want to be cautious about the employment aspect of our mandate. We are now not only fighting inflation, but inflation is moving towards 2%." Jerome Powell declined to reveal whether he supports a rate cut at the Federal Reserve's September meeting, but pointed out that the current monetary policy is already quite tight and no longer in line with the economic situation. He reiterated that there is no need to tighten monetary policy when the economy is not overheating. He said:
"I usually don't like to say anything before the (Fed) meeting that 'ties our hands,' but for some time now, I have been saying that with the current level of tightness in the Fed's interest rate target, policy would only be deliberately tightened when trying to cool an overheated economy, which is not the case at present."
Jerome Powell stated that he "completely agrees" with Powell's concerns about the labor market. He believes that taking a comprehensive view of the labor market as a whole is crucial. He noted that almost all indicators measuring the labor market are cooling down, and it is currently uncertain whether it will move towards a more normal level or weaken further, with some labor market areas showing "warning signals."
Bostic: Cannot wait for inflation to drop to 2% before taking action, may cut rates more than once this year
Before Powell's speech, Raphael Bostic, President of the Federal Reserve Bank of Atlanta with voting rights at this week's FOMC meeting, said that action should not wait until inflation drops completely to 2%, and that "it may be appropriate to implement the first rate adjustment early."
Bostic believes that monetary policy is already close to normalization. When asked if he supports cutting rates more than once this year, he replied, "It is possible."
Bostic also told another media outlet that the speed of the decline in inflation exceeded his expectations, although inflation is "not particularly close" to the Fed's target. He assessed that the U.S. labor market has undergone a "dramatic change," with the unemployment rate rising but still "robust."
Bostic stated that the magnitude of the first rate cut will depend on the data. If the unemployment rate unexpectedly soars, "we must take greater action." He also warned that if the inflation rate is too high, there is no need to take any action