Fed official Bostic says inflation target of 1.75% to 2.25% might be supported in future

Fed official Bostic says inflation target of 1.75% to 2.25% might be supported in future

Atlanta Fed President Raphael Bostic, during a recent interview with The Wall Street Journal, suggested that the Federal Reserve's current target range for inflation, which is between 1.75% to 2.25%, might be supported in the future. This statement comes amidst ongoing concerns about inflation and the Fed's dual mandate of maximum employment and price stability.

Bostic, who did not cast a vote in the recent FOMC meeting due to the rotation schedule, expressed his support for the Fed's recent decision to lower the federal funds rate by a quarter-point to 4 to 4-1/4 percent. He emphasized that while he penciled in one rate cut for 2025, his outlook remains data-dependent and he hasn't added any additional cuts to his forecast .

The Fed's dual mandate presents a challenge, with some participants viewing inflation as the greater risk and others focusing on employment conditions. Bostic, however, indicated that he considers inflation to be a more significant concern at present. He noted that while the labor market is not in crisis, there is a fair amount of uncertainty and businesses are cautious about hiring and firing due to policy uncertainty .

The Atlanta Fed president also highlighted the difficulty in forecasting economic outcomes in this period of uncertainty. He noted that the economic effects of various federal actions, such as tariffs and immigration policies, continue to evolve, making it challenging to predict future economic trends.

Bostic's comments come as the Fed faces a persistent rate of inflation that is higher than its target of 2 percent, with some participants expecting additional rate cuts. However, Bostic's stance is to hold on the one rate cut approved in September, while continuing to monitor incoming data, including an upcoming employment report and Atlanta Fed surveys .

In conclusion, Atlanta Fed President Bostic's comments suggest that the Fed's current inflation target range of 1.75% to 2.25% might be supported in the future, despite ongoing economic uncertainty. His data-dependent approach to monetary policy reflects the Fed's commitment to maintaining price stability while balancing the need for maximum employment.