Fed’s Bostic Says He Sees One Rate Cut This Year, No Recession
Federal Reserve Bank of Atlanta President Raphael Bostic said he expects the U.S. economy to slow this year but not fall into recession, and reiterated that he sees one interest rate cut in 2025.
Bostic said economic growth could be as low as 0.5% or 1% this year, as uncertainty and concerns about the outlook weigh on consumers. Fluctuating trade policies are also making businesses more reluctant to make major decisions, Bostic said.
“I would cut one rate this year,” Bostic said in a May 14 interview on Bloomberg’s Odd Lots podcast. “In part, that’s because I don’t think the uncertainty is likely to resolve quickly.” Bostic pointed to the 90-day delay in implementing so-called reciprocal tariffs along with the latest U.S.-China trade de-escalation, noting the final outcome of the negotiations remains unclear. When asked on the podcast, which aired Friday, whether the recent trade truce between the U.S. and China had changed his view, Bostic said, “a little bit.”
Bostic said last week that he didn’t think it was “prudent” to adjust monetary policy with so little visibility about the path forward. Fed officials kept interest rates steady at their last meeting, saying they saw rising risks of higher unemployment and higher inflation. Fed Chairman Jerome Powell made clear that the central bank was in no rush to lower borrowing costs.
Bostic said economists at the Atlanta Fed see rates as exerting upward pressure on inflation. That’s a view shared by many forecasters. “That means that our policy has to anticipate and to some extent potentially counteract those inflationary forces to the extent that we see them, so that would constrain our current policy stance,” Bostic said.
Source: Bloomberg
