Bostic: expect GDP growth of 2.4% in 2026, 2.1% in 2027, and return to trend in 2028

Bostic: expect GDP growth of 2.4% in 2026, 2.1% in 2027, and return to trend in 2028

Federal Reserve’s Bostic Projects 2026 GDP Growth at 2.4%, Emphasizes Caution on Rate Cuts

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, has projected U.S. GDP growth of 2.4% in 2026, followed by 2.1% in 2027, with the economy returning to its long-term trend by 2028. These forecasts align with the Federal Open Market Committee's (FOMC) recent assessment that economic activity has been expanding at a "solid pace," supported by resilient consumer spending and robust business investment in technology. Bostic attributed the optimism to a rebound in growth following the government shutdown and the stimulative effects of the new tax law, which he expects to bolster sales and inflationary pressures.

Despite the positive outlook, Bostic reiterated his opposition to rate cuts in 2026, emphasizing that inflation remains a "clearer and more pressing risk" than labor market concerns. He noted that businesses continue to face elevated input costs from tariffs, which they are likely to pass on to consumers, delaying a return to the Fed's 2% inflation target until 2028—later than many of his colleagues' 2027 projections. "We must maintain a modestly restrictive policy posture to hold the line on inflation," Bostic stated, cautioning that premature easing could exacerbate price pressures.

The FOMC minutes from its January 2026 meeting reflect a similar stance, with policymakers agreeing to keep the federal funds rate target unchanged at 3.5–3.75%. While most participants acknowledged signs of labor market stabilization, they highlighted persistent inflation risks and the need for a "careful balancing" of dual mandate objectives. The committee reaffirmed its commitment to adjusting policy based on incoming data, with no preset course for rate adjustments.

Bostic's projections also underscore structural uncertainties, including the impact of AI-driven productivity gains and geopolitical volatility. His tenure as Atlanta Fed president will conclude in February 2026, but his current analysis underscores the Fed's broader focus on managing inflation while navigating a resilient yet uneven economic recovery. The next FOMC meeting is scheduled for March 17–18, 2026, where policymakers will reassess the outlook amid evolving data.