Atlanta Federal Reserve President Raphael Bostic cautioned that tariffs could lead to a prolonged period of inflation rather than a short-term spike in costs. He anticipated that changes in U.S. trade policy and global events would result in elevated inflation persisting for a year or more. Despite pressure from President Trump to adjust monetary policy, Bostic supported Federal Reserve Chair Jerome Powell in advocating for a cautious approach to policy changes in response to tariff impacts on prices.
Bostic, a non-voting member of the Federal Open Market Committee, emphasized that the current economic uncertainty is not conducive to significant shifts in monetary policy. The upcoming FOMC meeting in late July coincides with the expiration of Trump’s 90-day pause on reciprocal tariffs. Bostic noted that recent inflation data indicated minimal impact from tariffs, suggesting that businesses were delaying price adjustments pending final tariff decisions rather than offsetting tariff-related pressures.
Following a lecture in Germany, Bostic’s remarks paralleled a robust June jobs report showing better-than-expected hiring and a reduced unemployment rate. The Fed has maintained interest rates since December 2024, with Powell indicating that the central bank would have continued cutting rates if not for the tariff implementation halting further adjustments.
Bostic’s call for patience mirrored Richmond Federal Reserve President Tom Barkin’s approach in evaluating tariff effects on the economy, likening it to navigating through fog. Both Fed officials expressed the challenge of deciphering the impact of tariffs on monetary policy decisions.
In his evaluation of the central bank’s stance on Wednesday, Barkin mentioned the uncertainty surrounding the policy’s effects on the economy. He highlighted the need for caution in the absence of pressing external factors, likening the situation to driving through fog and emphasizing the importance of proceeding slowly. (Source: Atlanta Fed’s Bostic cautions about potential long-lasting inflation from tariff impacts)
