Federal Reserve Bank of Atlanta President Raphael Bostic shared his thoughts late Thursday on the current state of the US economy, describing it as being in “incredible flux,” with uncertainty surrounding its direction. Bostic emphasized that waiting for clear trends in national economic data could lead to delayed responses, and the Fed must remain alert to developments on the ground.
Key Points from Bostic’s Remarks:
The US economy is in a state of flux, and predicting its future direction is challenging.
Immediate responses based on national data could be too late, so the Fed is actively monitoring changes and conversing with those on the ground.
The introduction of tariffs is raising costs, which could eventually lead to higher prices, though whether this results in sustained inflation remains uncertain.
Bostic acknowledged that inflation has been volatile and was already in reassessment mode, seeking clearer signals moving forward.
He expressed optimism in certain sectors like deregulation and energy but cautioned that the impact of recent policies may not be fully understood until late spring or summer.
The Fed’s decision-making in May or June will depend on the clarity available by then, and patience will be necessary.
It’s not ideal for the Fed to shift policy direction frequently, so maintaining a patient stance is prudent.
Bostic also emphasized that achieving the Fed’s 2% inflation target is crucial for the economy to operate at its full potential. The Fed will continue to work on reducing inflation while minimizing labor market disruptions, factoring in business sentiment when setting rates.
Market Reaction: Following Bostic’s comments, the US Dollar Index (DXY) is trading 0.09% lower at 104.10, reflecting a slight pullback in the dollar amid ongoing uncertainty over the US economy and inflationary pressures.
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