Raphael Bostic of the Federal Reserve Bank of Atlanta warned that rising price pressures over the next six to twelve months could intensify the Fed’s challenges.

Key Quotes

• A ton of economic scenarios that could play out, hard to assign probabilities.
• Outlook is for the economy to continue slowing, but also expect real uncertainty about what that means for jobs and inflation.
• Firms are still in a wait-and-see pattern around employment.
• Likely to be upward pressure on prices for six to 12 months; that puts pressure on the Fed.
• The most important question for the Fed is whether tariffs will shift prices once or more persistently.
• Policymakers would not respond to a one-time price shift, but there are compelling reasons to be sceptical.
• The way tariffs are unfolding makes it hard to pin down the impact and suggests the episode will last much longer than people anticipated.
• Businesses are using a mix of approaches in changing prices; ongoing discussion could shift expectations.
• Businesses will continue adjusting to tariffs well into next year.
• Fundamentals of the economy are still quite solid.