Atlanta Federal Reserve President Raphael Bostic said inflation could “see-saw” if policymakers cut rates of interest too soon, warning that inflation’s descent towards the central bank’s 2% goal was prone to slow within the months ahead, the Financial Times reported on Sunday.
Bostic, who will probably be a voting member on the Federal Open Market Committee this yr, said he was “expecting to see much slower progression of inflation moving forward,” adding that there have been “some risks that inflation may stall out altogether” in keeping with the report.
The Atlanta Fed president acknowledged that price pressures had fallen faster than he had expected in 2023 but still thinks inflation is prone to be nearly 2.5% by the year-end and only hit the Fed’s goal in 2025, the FT said.
After the Fed’s December policy vote, Bostic said he thought rates would wish to stay on hold until after the summer. He told the Financial Times that the uncertainty facing the U.S. economy warranted such a cautious approach.
“Inflation should be firmly and surely getting back to our 2% goal,” the newspaper quoted Bostic as saying. “It could be a nasty final result if we began to ease and inflation began to stand up and down like a see-saw. That may undermine people’s confidence in where the economy goes.”
Bostic said he was “expecting to see much slower progression of inflation moving forward.” REUTERS
Bostic cited the disruption of traffic within the Suez Canal attributable to Houthis targeting vessels as a reason for a rise in shipping costs. Getty Images
Bostic said the recent increase in shipping costs as a result of the disruption of traffic within the Suez Canal attributable to Houthis targeting vessels would must be watched “very closely,” in keeping with the FT.
“It can be very interesting to see to what extent the Middle East conflict and attacks on the container ships is starting to indicate up in the price structure for businesses in my district,” Bostic told the newspaper.
In an interview with Reuters in December, Bostic said the Fed can begin reducing rates “sometime within the third quarter” of 2024 if inflation falls as expected.
