On Friday Eastern Time, Atlanta Federal Reserve President Raphael Bostic indicated that the Federal Reserve should patiently and gradually lower its policy interest rates. This approach would enable the inflation rate to be reduced to the 2% target level while also preventing the U.S. economy from falling into a recession.

At an American Business Economic Education Forum held in Mississippi that day, Bostic stated, "I am not in a hurry to adjust interest rates to a neutral level. We must restore the inflation rate to the target level of 2%. I do not want our restrictive measures to be implemented for too short a time, leading to a halt in the progress against inflation, so I will remain patient."

A neutral interest rate refers to the level of interest rates that neither stimulates nor inhibits economic growth. Bostic believes that the neutral policy interest rate should be within the range of 3% to 3.5%.

Furthermore, Bostic pointed out that he expects the Federal Reserve to further reduce the benchmark interest rate. "If the economy continues to develop according to the current trend, if inflation continues to decline, the labor market remains strong, and we still see positive production, then we will be able to continue on the path back to the neutral interest rate."

Bostic predicts that by the end of 2025, the U.S. inflation rate may be reduced to the 2% target set by the Federal Reserve, and at that time, the interest rate should also be able to be adjusted to a neutral level.

Financial markets currently expect that the Federal Reserve will cut interest rates twice more by the end of this year, with each cut being 25 basis points, and further cuts are expected next year. By September 2025, the federal funds rate may be reduced to a range of 3.25% to 3.5%.

Last month, the Federal Reserve cut interest rates by a larger-than-expected 50 basis points to prevent the labor market from cooling down too quickly. However, since then, data from the U.S. job market has been much stronger than expected, with the monthly job growth rate accelerating and the unemployment rate dropping to 4.1%.

Bostic stated on Tuesday this week that in the dot plot submitted in September this year, he expects the Federal Reserve to cut interest rates by another 25 basis points this year.

"I have never included an economic recession in my expectations. I have always believed that the U.S. economy has enough momentum to digest the restrictive nature of Federal Reserve policies and push the inflation rate back to the 2% target level."

In addition to Bostic, San Francisco Federal Reserve President Mary Daly is also open to the possibility of not cutting interest rates at one of the remaining two Federal Reserve policy meetings this year. Daly said in a speech at New York University this week that if the U.S. economy continues to maintain its recent trend, "one to two interest rate cuts are reasonable."Daly also emphasized that the central bank's interest rate cut of 50 basis points last month does not presage the magnitude or speed of future rate cuts. Despite two economic reports released in the past month that exceeded expectations, she stated that she is not convinced that inflation is rebounding.