10:37 AM EDT, 09/03/2025 (MT Newswires) -- Two Federal Reserve bank presidents, Alberto Musalem and Raphael Bostic, both said Wednesday that the Fed's policy rate remains only slightly restrictive, saying that even recent employment data do not give a signal that the labor market is cooling drastically.

"The current modestly restrictive setting of the policy rate is consistent with today's full employment labor market and core inflation nearly one percentage point above the Fed's 2% target," Musalem, a voter on the Federal Open Market Committee, said in a speech to the Peterson Institute for International Economics.

Musalem conceded that risks to the employment mandate are tilted to the downside with recent data increasing that tilt.

At the same time, there is still considerable uncertainty about the effects of tariffs, with the baseline case being an effect that lasts over the next two to three quarters before fading, but there is also a possibility of that effects could be more persistent.

"As always, in the coming weeks and months, I will continue to update my outlook and my assessment of the balance of risks to seek a forward-looking path of interest rates that best positions monetary policy for achieving and maintaining maximum employment and price stability for all Americans," Musalem said.

Bostic, who next votes on the FOMC in 2027, had similar views in an essay posted to the Atlanta Fed's website on Wednesday, suggesting that only one rate cut may be needed in 2025.

"Today, I judge policy to be marginally restrictive," Bostic said. "I believe that, while price stability remains the primary concern, the labor market is slowing enough that some easing in policy -- probably on the order of 25 basis points -- will be appropriate over the remainder of this year."

Bostic said he remains data dependent, adding that the largest risk to the dual mandate will determine policy.

"Ultimately, my policy calculation comes down to the following: If the risk of not achieving price stability outweighs the risk of not achieving maximum employment, then the Committee probably wants restrictive policy that will curb inflation," Bostic wrote. "On the other hand, if the greater risk is to the health of the labor market, then we may want policy to ease, or be mildly stimulative to support employment. If I conclude that the risks to both sides of the dual mandate are in fact equal, then we might want the federal funds rate to be at or near neutral, or a stance that is neither restrictive nor stimulative."