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Investing.com-- Federal Reserve Bank of Atlanta President Raphael Bostic said Monday the U.S. economy is in a “big pause” amid uncertainty around President Donald Trump’s tariff policies, leaving the central bank in no position to make bold policy moves.
Speaking at Emory University, Bostic highlighted that inflation remains “much higher than” the target while the labor market remains strong and effectively at full employment. But businesses and households are holding back on major investments, he said, contributing to a standstill in economic momentum.
"Moving too boldly with our policy in any direction wouldn’t be prudent at the moment," said Bostic, citing unclear long-term implications of Trump tariffs.
"If the fog gets too thick, you should pull over and wait for it to clear up because you’re not gonna see enough, soon enough to avoid something bad if it’s going to happen," he said.
Bostic cautioned that the prospect of new tariffs could place upward pressure on consumer prices, and would likely complicate the Fed’s efforts to bring inflation back to its 2% target, effectively pushing out the timeline for achieving that goal.
Growth is expected to come in above 1% for the year, marking a slowdown from earlier estimates in the 2.2% to 2.3% range. However, the final outcome will largely hinge on how economic conditions evolve.
"I still see growth happening greater than 1% for the year. That’s a drop down from where we were at 2.2, 2.3. But we’ll really have to see what happens," Bostic added.