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Fed’s Bostic: Higher inflation on the cards
Federal Reserve Bank of Atlanta President Raphael Bostic said on Thursday that the US economy is likely to face a protracted period of adjustment in response to new trade and policy dynamics, warning it “will not be short or simple” and could extend over a year or more.
Key Quotes
- Adjustment of prices to trade and other policies will not be short or simple; it could take a year or more.
- The labour market remains healthy; we do not see signs of serious deterioration.
- The US is likely going to see a period of higher inflation readings.
- Not the right time to shift monetary policy given uncertainty.
- The "wait and see" approach regarding interest rates remains appropriate, particularly given the economy’s resilience.
- There is a risk that high inflation could begin to influence consumer psychology.
- The Fed should consider making a commitment to stable inflation expectations more explicit in its framework.
- Businesses are delaying hiring and investments; expect demand to stagnate or decline if costs continue rising.
- Recent sanguine inflation readings are a result of businesses delaying price increases to get clarity on final tariff levels.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
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