Raphael Bostic, President of the Atlanta Fed and a voting member of the Federal Open Market Committee, which determines monetary policy, told the Financial Times he was open to cutting interest rates before the fourth quarter.

The consumer price index, the primary measure to track inflation, fell below 3% in July year over year for the first time since early 2021, the Labor Department said Wednesday. That means inflation is inching closer to the Fed’s 2% target, the long-term average inflation rate the central bank aims to hit over time. The core inflation rate, which excludes volatile food and energy items and is used to gauge price pressures in the economy, was also at its lowest point in three years, a sign that prices are rising more slowly. 

At the same time, the unemployment rate jumped to 4.3% in July, with the U.S. adding fewer jobs compared to June and tens of thousands of jobs fewer than forecasters expected. The slowdown in job creation and weaker job growth could be signs of softening in the labor market. 

Although the timing of when to lower interest rates is a delicate balance, Bostic said waiting to cut rates is risky. Cutting rates too soon could trigger inflation, while waiting could potentially slow the economy. Accordingly, the timing is crucial to avoid an economic hit in either scenario.

“Waiting does bring risk, and that’s why we have to be extra vigilant on this,” he told the FT. “Because our policies act with a lag in both directions, we can’t really afford to be late. We have to act as soon as possible.”

The Atlanta Fed president previously supported a rate cut closer to the end of the year, but he acknowledged that recent positive inflation numbers have shifted his thinking.

“We’ve been saying for a long time that we want to see the numbers come in to give us more confidence that we’re sustainably on the path to 2% and I have to say, the numbers that have come in in the last several months have given me greater confidence that we’re sustainably on that path,” Bostic said.

Under its “dual mandate,” the Fed is in charge of both keeping prices stable by hedging inflation and fostering maximum sustainable employment. While Bostic described the labor market as “weakening but not weak,” he said it’s time to shift the Fed’s focus onto rising unemployment. 

“Now that inflation is coming into range, we have to look at the other side of the mandate, and there, we’ve seen the unemployment rate rise considerably off of its lows,” Bostic said.

After the unwinding of the yen carry trade shocked markets and saw major indexes end the week down, rumblings of a September rate cut have led the S&P 500 to five straight days of gains. Traders are now speculating whether the Fed will cut by a quarter or a half of a percentage point.

Bostic was noncommittal about how much the Fed should cut rates but said if the labor market weakens faster than expected, then “everything is on the table.” He noted that he didn’t expect that to happen, necessarily. 

“If we see that there is disruption that’s happening that suggests that labor markets are going to collapse—or might [collapse]—I would very much support moving more assertively to minimize the amount of that pain,” Bostic told the FT.