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Investing.com -- Atlanta Federal Reserve President Raphael Bostic cautioned that the Fed may have to wait "for a while" before resuming rate cuts to gauge the impact of prior round of rate cuts on the economy at a time when fears over a trade war are muddying the economic outlook.
“I want to see what the [percentage point] of reduction that we did at the end of last year translates to in terms of the economy, and it could—depending on what the data are—mean that we are waiting for a while,” Bostic said during an event at the Rotary Club of Atlanta.
The Fed cut rates by 100 basis points seen last year, and Bostic stressed the need to see how those cuts "translates to in the economy."
The Atlanta Fed president said a patient approach would avoid the Fed having to make U-turn on policy should assumptions about how the economy and inflation would evolve prove inaccurate.
“I want to be cautious and I don’t want to have our policy lean in one direction [based on] an assumption that the economy is going to evolve a certain way, then have to turn it around.”
The remarks echoed the cautious stance from the Fed seen last, when the central bank held rates between 4.25% to 4.5% and also signaled worries about stalling disinflation.
Bostic also pointed to the potential of a global tariff war further muddying the economic outlook in the wake of President Trump announcing tariffs on major U.S. trading partners including Canada, China and Mexico, though trade restrictions on the latter have now been paused for a month.
A global trade war is widely expected to push up inflation, undoing progress that the Fed has made so far in bringing inflation down toward target.
Still, Bostic continued to believe that inflation will continue to fall, pointing to expectations for housing disinflation to persist.