Federal Reserve Bank of Atlanta President Raphael Bostic has cautioned that the Fed’s main focus should be to contain inflation and that it presents a bigger risk than a labor market downturn. Bostic announced last month that he would retire once his term ends on February 28, 2026.
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“After wrestling with all the considerations, today I continue to view price stability as the clearer and more pressing risk despite shifts in the labor market,” wrote Bostic, adding that he expects inflation to remain above 2.5% at the end of 2026.
Fed Faces Credibility Risk from Inflation Surge, Says Bostic
Bostic explained that additional rate cuts would move monetary policy “near or into accommodative territory,” which would raise the risk of rising inflation that is already above the Fed’s target of 2%. Lower rates can increase inflation by making it cheaper to borrow capital and stimulating spending.
He also warned that the Fed faces the risk of losing credibility because inflation has risen by roughly 20% over the past five years, which has disproportionately affected low- and moderate-income households.
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