Atlanta Fed president Raphael Bostic said Wednesday he believes the central bank cannot wait until inflation hits 2% to begin cutting interest rates — and that while the job market has weakened, it’s not “weak.”

“We must not maintain a restrictive policy stance for too long,” Bostic wrote in an essay ahead of the Fed’s policy meeting in two weeks. “I believe we cannot wait until inflation has actually fallen all the way to 2% to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering.”

Bostic’s comments come ahead of the government jobs report due out Friday, which Fed officials are looking to for direction on the labor market. July’s jobs report clocked in weaker than expected and stirred fears in markets of a recession.

Economists expect the job market to have rebounded in August with expectations for 165,000 jobs created. That would be up from 114,000 jobs created in July. Both figures are still below the average monthly gain of 215,000 jobs created over the prior 12 months.

The unemployment rate is expected to tick down to 4.2% from 4.3% in July — a level that triggered a recession signal.

Right now, traders have priced in roughly 50-50 odds the Fed will cut by a quarter percentage point or half a percentage point. A much weaker jobs report on Friday would tip the scale toward a half-point cut.

Read more: Fed predictions for 2024: What experts say about the possibility of a rate cut

The Atlanta Fed president said the balance of risks has shifted, and he’s giving “basically equal attention” to the job market as he is inflation. And while the job market is cooling, he still views it as “stable.”

Bostic said that while the unemployment rate has ticked up to 4.3%, it’s just above the Fed’s long-run projection of 4.2%. He added that the 12-month moving average of jobs created is still a healthy 209,000 new jobs a month through July 2024. He also noted that while the hiring rate has fallen back to pre-pandemic levels, job openings, though down, remain above pandemic levels.

Meanwhile, the latest job openings data released Wednesday by the Bureau of Labor Statistics fell more than expected in July. There were 7.67 million jobs open at the end of July, a decrease from the 7.91 million seen in June. This marked the lowest number of job openings since January 2021.

Bostic said that employers tell him in direct conversations that they are hiring more cautiously, but few are contemplating layoffs.

Beyond the labor market, Bostic said other signals point to a broader economic slowdown — but “do not foretell impending collapse.”

“I do not sense a looming crash or panic among business contacts,” Bostic wrote. “However, the data and our grassroots feedback describe an economy and labor market losing momentum.”

Meanwhile, Bostic is encouraged that inflation is coming down, but he's not quite prepared to declare victory yet.

He wrote that the breadth of price increases is narrowing: Shelter prices are coming down, and inflation, measured by the Fed’s preferred inflation gauge — the core Personal Consumption Expenditures index, which excludes volatile food and energy prices — is growing under target at 1.7% for the three months through July.

“The most recent monthly reports bolster my confidence that inflation is likely on a sustainable path to the Committee’s 2% objective,” he said.

Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, cryptocurrencies, and the intersection of business and politics. Follow her on X @Jenniferisms.

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