Fed’s Bostic warns inflation fight isn’t over, urges caution on rates

Atlanta Fed President sees persistent price pressures, favors steady policy

Bostic noted that the jobs report was a mixed picture and that it did not change the outlook and that he would prefer to leave rates unchanged at the last Fed meeting. He said that “multiple surveys” are suggesting that there are higher input costs and that firms are determined to preserve their margins by increasing prices.

He added that “Price pressures are not just coming from tariffs, Fed should not be hasty to declare victory,” and that he sees GDP for 2026 at around 2.5%.

Key highlights:

Fed's Bostic tells reporters that Tuesday's jobs report was a mixed picture and did not change the outlook much.

Fed's Bostic: Weakness in job growth may stem from many factors, some of them structural, with executives laser-focused on headcount.

Fed's Bostic: I would have preferred to leave monetary policy where it was at the last Fed meeting.

Fed's Bostic: Multiple surveys are sending the same message of higher business costs and firms are determined to preserve their margins by raising prices.

Fed's Bostic: I was not worried about the outcome of the Fed regional bank reappointment process.

Fed's Bostic: I need to see progress on services inflation moving forward to gain confidence that Fed's 2% target can be achieved.

Fed's Bostic: At this point, most businesses feel technology will be close to jobs-neutral, allowing workers to be redeployed.

Fed's Bostic: Given the complexity of the moment, I would be surprised if there was consensus at the Fed.

Fed's Bostic: Price pressures are not just coming from tariffs, Fed should not be hasty to declare victory.

Fed's Bostic: For 2026 projections, I did not include any rate cuts, as I feel the economy will be stronger with about 2.5% GDP growth, requiring policy to remain restrictive.

Fed FAQs

What does the Federal Reserve do, how does it impact the US Dollar?

Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.

How often does the Fed hold monetary policy meetings?

The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.

What is Quantitative Easing (QE) and how does it impact USD?

In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.

What is Quantitative Tightening (QT) and how does it impact the US Dollar?

Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.