MNI BRIEF: Bostic Says Sticky Price Risk Deters Slashing Rates

Atlanta Federal Reserve President Raphael Bostic said at an MNI Connect event Monday the risk of a new bout of price gains means it's best to avoid a hasty interest-rate cut, and officials should be prepared for an extended pause or even a tightening of policy.

Inflation may return to target without raising rates but that isn't certain, Bostic said. “If things play out in a particular way, there may be heightened upward pressure on prices that may require us to raise rates or at least keep them at this level for a longer period than we might otherwise,” he said.

“I’m concerned that we may witness a sufficiently significant increase in pricing pressure that any kind of cut would exacerbate and make it harder to get us back down to our target,” Bostic said. “I’d like to avoid that to the extent that I can.” (See: MNI INTERVIEW: Fed To Cut Twice In 2025 On Weak Growth-Haslag)