Fed's Bostic: US progress on inflation is likely to slow

Atlanta Federal Reserve (Fed) President Raphael Bostic said on the weekend that inflation could "see-saw" if policymakers cut interest rates too soon, warning that inflation's descent towards the central bank's 2% goal was likely to slow in the months ahead, per the Financial Times. 

Key quotes

“Some risks that inflation may stall out altogether.”

“Inflation must be firmly and surely getting back to our 2 percent target.” 

“It would be a bad outcome if we started to ease and inflation started to rise up and down like a see-saw. That would undermine people’s confidence in where the economy is going.”

“Markets hear what we are saying—our projections for rate cuts have been pretty clear.”

“It will be very interesting to see to what extent the Middle East conflict and attacks on the container ships are starting to show up in the cost structure for businesses in my district.”

“If we look at our employment mandate, we’re hitting that very firmly today.”

"But that is not the case for price stability.”

“There are signs underneath the hood that some segments of the economy have weakened.” 

“Today we haven’t really seen any movements in money markets that suggest we’re close to a scenario where we don’t have ample reserves anymore.”

“Clearly at some point, there’s going to be a signal that we’re going to get closer to that threshold, and we’re going to have to do some thinking.”

Market reaction

The US Dollar Index (DXY) is trading higher on the day at 102.60, as of writing.