Atlanta Fed President Bostic stated on Monday that Kevin Warsh, President Trump's nominee for the next Fed Chair, will face a "daunting task" in leading the Federal Reserve, particularly in persuading members of the policy-setting committee to align with his monetary policy decisions.
Bostic, who is concluding his eight-and-a-half-year tenure as Atlanta Fed president this month, expressed his view that the Fed should not cut interest rates this year, a stance shared by several of his colleagues. Trump indicated that part of his reason for nominating Warsh is due to Warsh's alignment with the President's position on lowering borrowing costs.
"If you want to implement policy, or steer it in the direction you desire, you must persuade them to stand with you; and to do that, you need to build relationships with them," Bostic remarked. "You must earn their trust and demonstrate your wisdom and guidance. None of this can be achieved overnight. So it is a monumental task."
Last week, Fed policymakers voted 10-2 to maintain the target range for the benchmark interest rate at 3.50%-3.75%, signaling no rush to cut rates.
Bostic noted that given the current economic strength and a stabilizing labor market, cutting rates "would make the likelihood of inflation returning to target very low, and it would even be difficult to set it on a cooling path." "Therefore, I believe patience is necessary now," he concluded.
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