Atlanta Fed President Raphael Bostic stated that policymakers should remain focused on combating inflation, as elevated price pressures are expected to persist for much of next year.
Bostic revealed that during the Fed's December 9-10 policy meeting, he not only supported keeping interest rates unchanged but also advocated maintaining them until late 2026. His reasoning was that favorable economic factors could continue exerting upward pressure on inflation. Bostic is not a voting member of the Federal Open Market Committee (FOMC) this year, while most voting members ultimately backed a 25-basis-point rate cut at the December meeting.
"After weighing all factors, I still view price stability as a clearer and more urgent risk, despite shifts in the labor market," Bostic wrote in an article published Tuesday. "I see little evidence that price pressures will ease before mid-to-late 2026 at the earliest, and even by late 2026, inflation is expected to remain above 2.5%."
Bostic noted that dissenting views in last week's rate decision indicated it was a "difficult choice." However, he pointed out that while labor demand is cooling, he does not foresee a "severe labor market downturn" as the most likely scenario.
He suggested that some businesses that overexpanded post-pandemic may now be downsizing, while others are replacing labor with technology. Bostic views both trends as structural shifts that cannot be resolved through interest rate adjustments.
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