Inflation Rises, Bostic Rejects Immediate Rate Cut
Atlanta Fed President Raphael Bostic said in an interview with Fox Business that the latest inflation data suggests price pressures may be starting to build, driven in part by the increase in import tariffs under President Trump.
He highlighted that:
The Consumer Price Index (CPI) rose 2.7% year-on-year in June, compared to 2.4% in May.
Nearly half of product categories saw price increases of more than 5%, nearly double the rate from January.
This data suggests a potential inflection point in the inflation trend.
He emphasized that more data is needed before further rate cuts are considered, and that only one rate cut (25 bps) is likely this year.
This view contrasts with market expectations of two rate cuts starting in September.
Bostic emphasized that the impact of import tariffs on inflation is real and must be monitored closely.
Markets were volatile when rumors surfaced that Trump would fire Chairman Powell, but volatility subsided after confirmation that no such firing was planned.
Despite political pressure, Bostic emphasized that policy must be based on fundamental economic data, not external pressures.
Bostic expressed concern about rising inflationary pressures due to tariff effects and suggested maintaining a tighter policy stance.
He predicted only one interest rate cut this year, tempering expectations of an aggressive cut.
The key message: economic data should be the basis for policy, not political pressure.
Source: Newsmaker.id
