Fed’s Bostic says U.S. not past ‘worry point’ for inflation

The Federal Reserve may need to wait longer to cut interest rates because even with April’s slightly cooler inflation reading there is continued upward pressure on prices, Atlanta Fed President Raphael Bostic said on Thursday.

“We’re not past the worry point in terms of inflation getting back to our target,” Bostic said during a virtual class session with Stanford University business school students, noting that the share of goods for which prices are rising faster than 3% or 5% is higher than in a normal environment, even in the latest consumer price index reading.

Meanwhile, the labor market shows little sign of distress, he indicated. “Job growth has been robust … which tells me there’s still a lot of energy in the economy, and it gives me comfort in staying at a more restrictive level because we’re not at risk today, I don’t think, of falling into a contractionary environment,” Bostic said.

Bostic leans a bit more hawkish than some of his colleagues at the Fed, though the higher-than-expected inflation readings in the first three months of the year have brought more of his fellow U.S. central bankers to a similar view: that they will need to keep the policy rate in its current range of 5.25%-5.5% for longer than they had previously thought.


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