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Investing.com -- The President and CEO of the Federal Reserve of Atlanta, Raphael Bostic, shared his thoughts on inflation and consensus economic outlook in an interview on Yahoo Finance today.
Bostic noted that he did not anticipate a linear progression in inflation, questioning whether the Consumer Price Index (CPI) for January was an anomaly or a sign of a new trend. He admitted that it is challenging to incorporate all potential policy changes into the economic outlook.
Bostic also revealed that the confidence in the economic outlook for 2025 has diminished. He suggested that while some policy proposals may increase inflation, others could enhance productivity and reduce price pressures.
Many business leaders remain optimistic about regulatory changes and believe they could outweigh any additional costs. According to Bostic, these leaders’ preferred strategy is to pass on tariffs to retail prices, but the reaction of consumers to this strategy remains to be seen. Businesses are also expressing concern that their customers may have reached their spending limits.
Bostic clarified that the Federal Reserve did not excessively cut rates last year and that the current policy remains restrictive. He expressed comfort with pausing to observe how the economy evolves.
Bostic expressed strong support for reducing the balance sheet and stated that the Federal Reserve has made good progress in this aspect. He mentioned that the Federal Reserve is nearing its threshold level for the balance sheet, with the debt ceiling being one factor in determining this level.
Bostic emphasized the need to monitor the balance sheet daily to ensure that the drawdown does not exceed acceptable limits. He also mentioned that rate cuts are a possibility. Bostic stated that all options are considered at every meeting, without ruling out or confirming any particular course of action.
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