Fed’s Bostic Urges Caution on Rates Amid Tariff Turmoil

Atlanta Fed President Raphael Bostic stated on Tuesday that the U.S. economy remains strong but the Federal Reserve should maintain its current interest rate stance because of the trade uncertainty caused by President Donald Trump's new tariffs.

The Atlanta Fed published a note from Bostic which supports maintaining the current 4.25%-4.50% target interest rate but he keeps an open mind about a potential rate cut during the second half of the year.

Bostic stated that patience remains the correct strategy because the economy demonstrates sufficient strength to observe the trade battles' development.

Bostic told reporters that inflation exceeds the Fed's 2% target which makes the decision about rate cuts challenging. The economic forecasting process has become more challenging because of the trade-related uncertainty that Trump's tariffs have introduced.

The Federal Reserve will convene its next meeting in mid-June but financial markets show decreasing confidence about upcoming interest rate adjustments because of the White House's erratic trade policy decisions. Bostic monitors the inflation and employment indicators to determine if the tariff-related disruptions will lead to higher inflation rates or employment losses.