MNI BRIEF: Fed's Bostic- Pent-Up Exuberance Calls for Patience
Atlanta Fed President Raphael Bostic says there is still considerable upward pressure on prices.
Federal Reserve Bank of Atlanta President Raphael Bostic said Thursday the U.S. labor market is strong with still considerable upward pressure on prices, but one concern about cutting interest rates is that businesses seem to be poised to pounce on the first hint of a cut.
"There's a lot of capital on the sidelines and they're looking to time their reentry into the marketplace to try to capitalize on a release of that, and that could spur sort of a resurgence, if you will, a bout of economic activity that might be counterproductive to what we're trying to accomplish," Bostic said in an event with Stanford University. "That has implications for what an appropriate pathway to policy will look like and it might mean that we have to be a little more patient and be more certain that inflation is on its way to 2% before moving and that is an important thing." (See: MNI INTERVIEW: CPI Keeps Fed On Track For '24 Cuts-Ireland)
"Even in the most recent CPI, the share of the goods in the market basket above 3% and above 5% are well above what you would see in an ordinary, in a more normalized environment. That tells me there's still considerable upward pressure on prices to suggest that we're not past the worry point in terms of inflation," said Bostic, also noting that job growth has been robust. "There's still a lot of energy in the economy and it gives me comfort in staying at a more restrictive level because we're not at risk today, I don't think, of falling into a contractionary environment."