Atlanta Federal Reserve President Raphael Bostic stated on Monday that Kevin Warsh, nominated by former President Trump to be the next Fed Chair, would face a "difficult task" if ultimately confirmed by Congress. He emphasized that steering monetary policy would particularly require persuading other members of the Federal Open Market Committee (FOMC) to support his stance.
Speaking at an Atlanta Rotary Club event, Bostic pointed out that Fed policy is not determined by the Chair alone. "If you want policy to move in the direction you desire, you must have other committee members willing to go with you. This requires building relationships, earning trust, and demonstrating wisdom and leadership. None of this can be accomplished overnight," he said.
On monetary policy, Bostic reiterated his view that the Fed should not cut interest rates this year, stressing that inflation risks have not yet fully subsided. "It is too early to declare the inflation mission accomplished," he noted.
He indicated that with the economy remaining resilient and the labor market stabilizing, cutting rates now would make it more difficult to return inflation to the 2% target. Therefore, he believes "this is a time for patience."
Fed officials voted 10-2 last week to maintain the benchmark interest rate in the 3.50% to 3.75% range and signaled no rush to cut rates in the near term. Former President Trump had previously stated that part of his reason for selecting Warsh was due to the latter's agreement with the president's view that "borrowing costs should be lower."
Current Chair Jerome Powell, who has long been criticized by the former president for not cutting rates as quickly as desired, will see his term end in mid-May.
In market reaction, Bostic's comments reinforced expectations that rates will remain higher for longer. According to the CME FedWatch Tool, the probability of a 25-basis-point rate cut at the March 18 FOMC meeting fell to 10.9%, down from 13.4% the previous day.
Analysis suggests that if Warsh takes over, the future direction of Fed policy will still depend on his ability to build consensus internally. With inflation uncertainties persisting and the economy remaining robust, the Fed is likely to maintain a wait-and-see stance in the short term.
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