Federal Reserve Bank of Atlanta President Raphael Bostic said on Thursday that the US economy is likely to face a protracted period of adjustment in response to new trade and policy dynamics, warning it “will not be short or simple” and could extend over a year or more.
Key Quotes
- Adjustment of prices to trade and other policies will not be short or simple; it could take a year or more.
- The labour market remains healthy; we do not see signs of serious deterioration.
- The US is likely going to see a period of higher inflation readings.
- Not the right time to shift monetary policy given uncertainty.
- The "wait and see" approach regarding interest rates remains appropriate, particularly given the economy’s resilience.
- There is a risk that high inflation could begin to influence consumer psychology.
- The Fed should consider making a commitment to stable inflation expectations more explicit in its framework.
- Businesses are delaying hiring and investments; expect demand to stagnate or decline if costs continue rising.
- Recent sanguine inflation readings are a result of businesses delaying price increases to get clarity on final tariff levels.
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