Fed’s Bostic Says Tariff Pass-through May Be Slow, Persistent
DevinFederal Reserve Bank of Atlanta president Raphael Bostic said tariffs may cause an incremental impact on prices instead of a one-time bump, which could result in more persistent upward pressure on inflation.
Federal Reserve Bank of Atlanta president Raphael Bostic said tariffs may cause an incremental impact on prices instead of a one-time bump, which could result in more persistent upward pressure on inflation.
“There is a risk that seeps into the psyche of the consumer and the business leader,” Bostic said on Monday during an event in London hosted by MNI.
A divide has developed among Fed officials, likely over how tariffs are expected to affect inflation.
Projections released at the Fed’s policy meeting earlier this month showed 10 officials would look through the price impact from tariffs and expect to lower rates at least two times this year. But seven officials pencilled in no rate cuts for this year, suggesting they are more concerned that tariffs could lead to more persistent price pressures.
Two Fed governors, Christopher Waller and Michelle Bowman, have said they would back lowering rates as soon as July if inflation remains subdued. But many officials have pushed back on that idea, saying they expect to hold rates steady until the fall as they watch to see how much inflation will be affected by tariffs.
The Atlanta Fed chief said he pencilled in one rate cut for this year and three in 2026, but said there’s a high level of uncertainty around the projections.
Bostic repeated his view that there is not enough information available right now to consider an adjustment in rates. He added that the Fed has the “luxury” of being able to wait for more information because the US labour market still looks solid.
