10:08 AM EDT, 06/27/2024 (MT Newswires) -- If the economy and inflation reduction progress as forecast, a cut in interest rates is possible in Q4, but the data will be the guide, Atlanta Federal Reserve Bank President Raphael Bostic, a voter on the Federal Open Market Committee in 2024, said Thursday in an essay posted on the Atlanta Fed's website.

Inflation remains stubbornly above the 2% target and progress on reducing it is taking longer than expected, but there are signs that supply and demand are moving into better balance, Bostic said.

"Taking all the circumstances into account, I continue to believe conditions will likely call for a cut in the federal funds rate in the fourth quarter of this year," Bostic said. "Still, the pandemic years have brought many surprises, and so I'm not locked into any particular policy path. There are plausible scenarios in which more cuts, no cuts, or even a raise could be appropriate. I will let the data and conditions on the ground be my guide."

While the Fed's 2% inflation target is "unquestioned," it is not necessary for the Fed to wait for inflation to get that low before trimming rates, noting that delaying cuts that long would be detrimental to the economy, Bostic said.

"Rather than holding the federal funds rate steady until we are at the target, I would favor reducing the policy rate once I gain additional confidence that we are clearly on the path to the 2% objective," Bostic said.

Gaining that confidence means seeing downward progress in shelter prices and services prices, which have been stickier than goods prices to decline, Bostic said, adding he would like to see a reduction in how widespread inflation has been and wants assurances that price stability will remain near the target after it is achieved.

"When we get inflation to 2%, that does not mean prices across the board will be lower than they were before 2021," Bostic said. "What it does mean is that we should have an economy in which inflation no longer dominates the psychology of consumers and producers, and that is the state the committee and I aim to achieve."