MNI BRIEF: Fed's Bostic - Front-Running Tariffs May Be Ending

U.S. businesses' ability to front-run President Trump's tariffs and maintain status quo while trade policies fluctuate may be nearing an end, meaning pricing and workforce changes could be coming soon, Atlanta Federal Reserve President Raphael Bostic said Tuesday.  

He and his staff are keenly watching for signs of these shifts to gauge the impact of tariffs on the economy and the appropriate path for interest rate policy, he told reporters on the sidelines of an Atlanta Fed conference in Amelia Island, Florida. 

"We should wait and see where the economy is going before we do anything definitive. If the uncertainty persists, then the likelihood that businesses will continue to be in a pause-and-wait mode last longer, which means it will take longer for me to have a clearer view about the direction of the economy to be confident about how our policies should shift," Bostic said. 

"One thing we’ve heard is a lot of tariff impact to date has not shown up in the numbers yet. There's been a lot of frontrunning to build inventories. We're hearing from an increasing number of businesses that those strategies have started to run their course. So the ability to wait and hold might be declining. We’ll have to see how that plays out and how that means." 

Right now, firms are telling the Fed bank they're comfortable with their staffing and demand, but if they start saying they're putting more weight on contingency plans to scale back their workforce, that could give some advance notice about coming changes, Bostic said. 

Ahead of the June FOMC meeting, Bostic said he's expecting a "vigorous debate" out of a diverse set of views among his staff about how long before there's clarity about the economic outlook. (See: MNI INTERVIEW: Fed Cuts Start In Q4 As Tariffs Weigh -Crandall)