Fed’s Bostic wants more progress on inflation, in no rush to cut

US Federal Reserve Bank of Atlanta president Raphael Bostic said he’s in no rush to move interest rates, adding he wants to see “a lot” more progress on inflation despite recent encouraging price data.

“There’s still a ways to go in terms of the progress that we are going to need to see,” Bostic said in a phone call with reporters on Tuesday (Jun 3). “I’m not declaring victory on inflation yet.”

Bostic on Tuesday also released his latest essay on the economy. In it he reiterated his stance that he sees no need to adjust rates until he knows more about how tariffs and other policies will be implemented and how they will ripple across the economy.

“I continue to believe the best approach for monetary policy is patience,” Bostic said in an essay published on Tuesday. “As the economy remains broadly healthy, we have space to wait and see how the heightened uncertainty affects employment and prices. So, I am in no hurry to adjust our policy stance.”

Speaking to reporters, he said he still sees the potential for one quarter-point interest-rate cut in 2025.

Fed officials have signalled they will hold interest rates steady until they have a better understanding of how US President Donald Trump’s policies on tariffs, immigration and taxes will affect the US economy. Many economists and policymakers have said they expect Trump’s levies will slow growth and boost prices, with the scale of the impact depending on how the tariffs are implemented.

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Bostic said research by economists at the Atlanta Fed suggests tariff-related price increases will start appearing in the coming weeks. Those price pressures may subside if agreements with trading partners result in lower tariffs, he said. But if “elevated import levies persist, then the opposite will probably happen”, he said.

Officials may be able to “look past” price increases sparked by tariffs if they appear as a “one-time bump”, Bostic said. But the risks are different if the levies trigger more persistent inflation, he said.

“Then there is a risk that inflation and higher inflation expectations could get entrenched in a more enduring way, which could warrant a policy response,” said Bostic.

Tough call

In the call with reporters, Bostic was asked if recent inflation readings would merit a rate cut in the absence of elevated uncertainty. The Fed’s preferred price gauge showed inflation was 2.1 per cent in the year to April.

“I actually think this is a tough call,” Bostic said, acknowledging the recent positive data. But, he added, underlying measures “are still flashing red”.

“So you take that as a baseline and then you put the uncertainty on top of it, and many of the economic models would suggest that there’s likely going to be some upward pressure on prices moving forward,” he said. “That makes me very cautious about sort of jumping to cuts at this point.”

Speaking separately on Tuesday, Fed governor Lisa Cook stressed the importance of price stability to achieving a strong labour market in the long term.

“As I consider the appropriate path of monetary policy, I will carefully consider how to balance our dual mandate, and I will take into account the fact that price stability is essential for achieving long periods of strong labour market conditions,” Cook said at an event organised by the Council on Foreign Relations in New York.

She added that the central bank’s monetary policy was well positioned to respond to a range of potential developments.

Policymakers are widely expected to leave rates unchanged when they meet Jun 17 to 18 in Washington, according to pricing in futures contracts. Officials will issue fresh projections for interest rates, growth, inflation and the labour market at that gathering. BLOOMBERG