Fed’s Bostic Sees Slowing Growth, Tariff-Driven Inflation Lasting Up to a Year

Atlanta Federal Reserve President Raphael Bostic said the U.S. economy is "likely to continue slowing," adding that businesses face considerable uncertainty about what that will mean for jobs and inflation. Speaking in a Q&A on Thursday, he cautioned that many economic scenarios are possible and that assigning clear probabilities is difficult. Bostic expects upward pressure on consumer prices to persist for the next six to 12 months, a development he said "puts pressure on the Fed" as it tries to guide inflation back to its 2% target. Companies remain in a wait-and-see stance on employment, he added, with smaller firms feeling the brunt of import taxes because their supply chains are harder to diversify and their margins thinner. The Atlanta Fed chief warned that the evolving rollout of U.S. tariffs—including the 145% duty on Chinese goods that took effect in April—makes it hard to gauge how long price effects will last. He is skeptical the impact will be merely temporary and predicts businesses will keep adjusting prices well into next year, leading to further fluctuations. Bostic emphasized that policymakers would look through a one-off jump in prices but must stay vigilant if tariffs cause sustained increases. His remarks come a week after the Federal Open Market Committee left interest rates unchanged amid growing concern about cooling growth and inflation that remains above target.