Atlanta Federal Reserve President Raphael Bostic said inflation could “see-saw” if policymakers cut rates of interest too soon, warning that inflation’s descent towards the central bank’s 2% goal was likely to slow within the months ahead, the Financial Times reported on Sunday.
Bostic, who shall be a voting member on the Federal Open Market Committee this yr, said he was “expecting to see much slower progression of inflation moving forward,” adding that there have been “some risks that inflation may stall out altogether” according to the report.
The Atlanta Fed president acknowledged that price pressures had fallen faster than he had expected in 2023 but still thinks inflation is likely to be nearly 2.5% by the year-end and only hit the Fed’s goal in 2025, the FT said.
After the Fed’s December policy vote, Bostic said he thought rates would want to remain on hold until after the summer. He told the Financial Times that the uncertainty facing the U.S. economy warranted such a cautious approach.
“Inflation should be firmly and surely getting back to our 2% goal,” the newspaper quoted Bostic as saying. “It might be a nasty consequence if we began to ease and inflation began to stand up and down like a see-saw. That might undermine people’s confidence in where the economy is going.”
![Raphael Bostic](https://nypost.com/wp-content/uploads/sites/2/2024/01/president-chief-executive-officer-federal-55010173.jpg?w=1024)
![Bostic cited the disruption of traffic in the Suez Canal caused by Houthis targeting vessels as a reason for an increase in shipping costs.](https://nypost.com/wp-content/uploads/sites/2/2024/01/2024-ismailia-egypt-wake-israels-74661151-1.jpg?w=1024)
Bostic said the recent increase in shipping costs due to the disruption of traffic within the Suez Canal attributable to Houthis targeting vessels would want to be watched “very closely,” according to the FT.
“It should be very interesting to see to what extent the Middle East conflict and attacks on the container ships is starting to show up in the price structure for businesses in my district,” Bostic told the newspaper.
In an interview with Reuters in December, Bostic said the Fed can begin reducing rates “sometime within the third quarter” of 2024 if inflation falls as expected.