Fed's Bostic warns of inflation impact while supporting one rate cut

In the United States, Atlanta Fed President Raphael Bostic expressed his preference for only one interest rate cut in 2025, rather than the previously considered two, during an appearance on CNBC. This statement comes after a consumer sentiment survey indicated that Americans are increasingly worried about tariffs driving up inflation. Bostic specifically noted that tariffs have exceeded the Fed's earlier expectations, causing him to rethink the timing of potential rate adjustments. With inflationary pressures intensifying, he emphasized a degree of caution regarding economic conditions while advising on the decision-making process of the Federal Reserve. Currently, the Federal Open Market Committee (FOMC) is expected to maintain steady rates at its meeting on June 18. Market predictions suggest that upcoming economic data will heavily influence the Committee's future interest rate decisions. In light of the latest assessments, the Fed aims to balance achieving maximum employment with ensuring stable prices. Reports indicate that although the economy is managing solid growth and low unemployment levels, inflation remains a key concern that could impact their next steps. In recent discussions on tariffs, the evolving economic landscape has prompted experts to revisit the potential need for rate cuts. Bostic highlighted that rising inflation expectations could complicate the Fed's efforts in striving for its dual mandate. Notably, even though the latest data hasn't yet shown substantial impacts due to tariffs imposed, the central bank remains vigilant in monitoring job and inflation metrics ahead of critical policy meetings. Overall, as inflation fears rise, Bostic's statements reflect the Fed's cautious approach to navigating these economic dynamics. While there is a reduced risk of recession compared to earlier estimates, the situation remains fluid. The upcoming FOMC meeting is poised to significantly shape market expectations for monetary policy in the latter half of the year, hinging on forthcoming economic reports and policymakers' assessments.