Atlanta Fed Pres. Rafael Bostic is speaking and says:
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Outlook is for the economy to continue slowing, but also expect real uncertainty about what that means for jobs and inflation
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Firms still in wait and see pattern around employment
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Likely to be upward pressure on prices for six to 12 months, that puts pressure on the Fed
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The most important question for the Fed is whether tariffs will shift prices once or more persistently
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Policymakers would not respond to a one-time price shift, but there are compelling reasons to be skeptical
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That way tariffs are unfolding make it hard to pin down the impact, and suggest the episode will last much longer than people anticipated
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Businesses are using a mix of approaches in changing prices, ongoing discussion could shift expectations
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Feel businesses will continue adjusting to tariffs well into next year.
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Fundamentals of the economy are still quite solid
The take away from Fed’s Bostic is a little more cautious. There is no guarantee that the price hikes from tariffs will be one time, and that is the key to those that officials sitting on the fence.
Yesterday Fed’s Kashkari seemed to dismiss that risk saying that the risks of not cutting could be great as well, and that the Fed could subsequently raise rates if they are wrong about the inflation impact. He seems to be shifting the other way while Bostic is still on the fence and more concerned about the inflation issue.
