Federal Reserve Bank of Atlanta president Raphael Bostic. — Bloomberg
WASHINGTON: Federal Reserve Bank (Fed) of Atlanta president Raphael Bostic says officials must wait for further clarity on President Donald Trump’s policies before adjusting interest rates.
“The specific place that the economy will land depends critically on the details of where policy lands,” Bostic said on Monday during a moderated conversation in Atlanta.
“Because we don’t know that now, again, that’s another reason why I feel like moving too boldly with our policy in any direction wouldn’t be prudent at the moment.”
Fed officials have signalled they are prepared to hold interest rates at current levels to reduce the risk that sweeping tariffs ignite a lasting rise in inflation. The Fed’s benchmark rate has been in a target range of 4.25% to 4.5% since December.
Several policymakers have said they want more time to see how Trump’s plans for trade, immigration and regulation will affect the economy.
Both officials and economists have lowered their outlook for growth and lifted their forecasts for inflation this year, citing Trump’s policies and the uncertainty around them.
Bostic noted the labour market is generally in line with the Fed’s maximum employment goal, but the central bank still has a ways to go to reach its 2% inflation mandate.
He reiterated tariffs are likely to push out the timeline for reaching that price goal.
Bostic said last month that he sees just one rate cut as likely this year, rather than the two he forecast previously, because he expects tariffs to slow the Fed’s progress on inflation.
The Atlanta Fed chief anticipates economic growth upwards of 1% this year, but he said there’s a lot of uncertainty around that outlook. He described the economy as being in a “big pause position”.
Bostic pointed to businesses holding off on investments and consumers delaying big purchases.
“There’s enough uncertainty moving forward about the stability and the robustness of growth that most business leaders are not eager to just sort of get out ahead of things and hire,” Bostic said. — Bloomberg
