Atlanta Federal Reserve Chairman Bostic said on Thursday that prices are still under pressure to continue to rise
The Zhitong Finance App learned that Atlanta Federal Reserve Chairman Bostic said on Thursday that the Federal Reserve may have to wait longer to cut interest rates because even if the April inflation data cools slightly, prices are still under continuous upward pressure.
In an online class with Stanford Business School students, Bostic said: “We are not past the stage of concern; inflation is still a long way to go back to our target.” He pointed out that even in the latest consumer price index, the proportion of goods that have risen in price by more than 3% or 5% is still higher than the proportion under normal circumstances.
At the same time, he pointed out that there are few signs of trouble in the labor market. Bostic said, “Employment growth has been very strong... This tells me that there is still a lot of dynamism in the economy, which reassures me that we are at a higher level of restraint because I don't think we are at risk of falling into a contractionary environment today.”
Bostic's position is tougher than that of some of his colleagues at the Federal Reserve, but higher-than-expected inflation data for the first three months of this year gave more US central bankers a similar view: they need to keep the policy interest rate within the current range of 5.25% to 5.5%, longer than previously anticipated.
Bostic said he believes the Federal Reserve may need to delay interest rate cuts until the last three months of this year. He came to this conclusion based in part on feedback from business owners who said they would wait to deploy capital before borrowing costs became more attractive.
He said, “I've actually really accepted this... we may need to be more patient and more certain that inflation is moving towards the Fed's 2% target before considering cutting interest rates.”
Bostic pointed out that until the Federal Reserve reaches the 2% inflation target, he will not consider changing this target, but once this target is reached, it may be time to discuss whether a new benchmark is needed, as structural changes in the economy since the COVID-19 pandemic may drive up inflation. He said the Federal Reserve will begin a new framework review in 2025, which may include this subject.