Atlanta Fed President Raphael Bostic emphasised the Federal Reserve’s ongoing commitment to bringing inflation down to the 2% target, describing the central bank’s focus as “laser focused” on this goal. Despite some cooling in the labour market, Bostic stated it is not yet fundamentally weaker, characterising the current situation as a “no hire, no fire” dynamic where employment remains relatively stable.

He acknowledged a tension between the Fed’s dual mandates of maintaining price stability and supporting maximum employment. Inflation remains significantly above target and continues to be one of the main challenges facing the US economy.

Bostic also highlighted a “K-shaped” economic pattern in the US, where higher-income consumers continue to spend robustly, helping to sustain economic resilience, while lower-income households have struggled with increased pressures since the end of pandemic-era support measures.

On cost pressures, Bostic pointed out they are not driven solely by tariffs but also by stress in sectors reliant on foreign workers, indicating supply-side difficulties beyond trade-related factors.

Looking ahead, Bostic reaffirmed his previous outlook that he “pencilled in no further reductions” in interest rates for 2026. This contrasts with market expectations, which currently price in 53 basis points of easing this year but only see a 50% chance of a cut by April, following recent data that showed stronger non-farm payrolls and a lower unemployment rate.

Bostic is set to retire on 28 February, and his replacement has yet to be announced, adding some uncertainty to the Fed’s future policy direction.

Original Source: Adam Button of investinglive.com