Either way, you have a 1/2 stitch jog.
I've used both. But prefer to cut where the ribbing joins the body. And just reknit the ribbing. You can do it in one piece-front right, back & front left. I think it looks neater than grafting. You can do a few decreases when starting the ribbing, to make it snugger, if needed. Or you can work with smaller needles. I'd calculate how much smaller you want it first.
Another option is to make bigger seams on the sides.