Fed's Bostic: Economy is expected to lose further momentum
Raphael Bostic of the Federal Reserve Bank of Atlanta warned that rising price pressures over the next six to twelve months could intensify the Fed’s challenges.
Key Quotes
A ton of economic scenarios that could play out, hard to assign probabilities.
Outlook is for the economy to continue slowing, but also expect real uncertainty about what that means for jobs and inflation.
Firms are still in a wait-and-see pattern around employment.
Likely to be upward pressure on prices for six to 12 months; that puts pressure on the Fed.
The most important question for the Fed is whether tariffs will shift prices once or more persistently.
Policymakers would not respond to a one-time price shift, but there are compelling reasons to be sceptical.
The way tariffs are unfolding makes it hard to pin down the impact and suggests the episode will last much longer than people anticipated.
Businesses are using a mix of approaches in changing prices; ongoing discussion could shift expectations.
Businesses will continue adjusting to tariffs well into next year.
Fundamentals of the economy are still quite solid.
Source: FXstreet
