Bostic Announces Retirement Amid Trump Push for More Influence Over Fed

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Summary:

Bostic said on Wednesday he believes labor market conditions do not warrant an aggressive Fed response while inflation remains too high.

Atlanta Federal Reserve President Raphael Bostic, the first Black and openly gay person to lead one of the U.S. central bank's 12 regional banks, said on Wednesday he will retire at the end of his current term on February 28, 2026, an unexpected departure amid a push by President Donald Trump for more influence over the Fed.

Trump does not select the presidents of the regional Fed banks, but the appointments must be approved by the central bank's Board of Governors, which the U.S. president is trying to reshape through the attempted firing of Governor Lisa Cook and the upcoming choice of a replacement for Fed Chair Jerome Powell when his term as Fed chief ends next spring.

Trump has railed against the Powell-led Fed for being too cautious and slow in cutting rates. Bostic's exit marks the second departure this year of a hawkish voice at the Fed, which is weighing whether to continue with the interest rate cuts that it kicked off in September or pause the monetary easing in light of still-elevated inflation.

Bostic said on Wednesday he believes labor market conditions do not warrant an aggressive Fed response while inflation remains too high.

All three Fed governors appointed by Trump have explicitly backed further easing, with calls for especially steep cuts from Stephen Miran who joined the seven-member board after the surprise departure in August of the hawkish-leaning Adriana Kugler.

Bostic wouldn't have been among the five Fed regional bank presidents who join the seven governors in regular rate-setting votes until 2027, but he, like the rest of the non-voting Fed bank presidents, takes part in the policy debate and helps shape the ultimate decision.

All regional Fed bank presidents are up for reappointment to new five-year terms, a usually quiet process guided by local boards of directors that could be more complex this year should the Trump administration decide it wants more influence in the selection process.

The 59-year-old Bostic, who is more than five years away from the Fed's mandatory retirement age, had been outspoken at times during his eight-and-a-half-year tenure about issues of economic equity, particularly in the wake of national social justice protests in 2020. While that approach did not seem to influence his views on monetary policy, which tended at times to the hawkish to guard against rising inflation, it sparked criticism from conservatives who saw attention to those issues as part of a "woke" Fed straying from its Congressional mandates.

He was also swept up in a central bank controversy about the trading activities of some policymakers. The Fed's in-house Inspector General said last year that the Atlanta Fed chief had created both the appearance of trading on confidential information and the appearance of a conflict of interest based on how he had managed and reported his personal investments.

'PROUD OF WHAT WE ACCOMPLISHED'

Bostic, who has a PhD in economics from Harvard University, worked as an academic and policymaker at the Department of Housing and Urban Development before joining the Fed. He did not announce any further plans.

"It's been my distinct honor and privilege to lead the Atlanta Fed for these past eight and a half years," Bostic said in a statement about his plans to not seek reappointment to another five-year term. "I feel incredibly fortunate."

"I'm proud of what we accomplished during my tenure to turn the lofty goal of an economy that works for everyone into more of a reality, and I look forward to discovering new ways to advance that bold vision in my next chapter," said Bostic, who took on prominent roles in Atlanta civics groups while also traveling to rural parts of his southeastern district in an effort to deepen the Fed's work on community development.

A search committee will be formed to select his replacement.

"As the leader of the Atlanta Fed, he successfully represented the varied perspectives of the Sixth Federal Reserve District, representing the economic experiences of all Americans in the formation of monetary policy," said Gregory Haile, the chair of the Atlanta Fed's board of directors.

Powell, in comments included in the statement released by the Atlanta Fed, said it had been a privilege to serve alongside Bostic.

"His perspective has enriched the Federal Open Market Committee's understanding of our dynamic economy. And his steady voice has exemplified the best of public service - grounded in analysis, informed by experience, and guided by purpose. His leadership has strengthened our institution and advanced the Federal Reserve's mission," Powell said.

Source: Reuters

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