Atlanta FED President Raphael Bostic warned that the progress made by the USA on inflation may slow down in the coming months. Bostic expressed concerns that inflation could fluctuate unpredictably if policymakers cut interest rates prematurely.
Inflation in the USA reached its highest level in recent decades in the summer of 2022, but experienced a significant decline in the second half of the year.
However, Bostic, who will participate in the decisions of the Federal Open Market Committee (FOMC) this year, foresees a much slower progress on inflation going forward. He even expressed the possibility of a complete halt to progress in inflation.
After the Fed’s policy vote in December, Bostic said he believed interest rates should remain steady until after the summer. The current uncertainty surrounding the US economy justifies such a cautious approach, he told the Financial Times.
Bostic emphasized the importance of inflation returning steadily to the FED’s 2 percent target. Bostic warned:
“If we start easing and inflation starts going up and down like a seesaw, that would be a bad outcome. That would shake people’s confidence in where the economy is going.”
*This is not investment advice.