Atlanta Fed President and CEO Raphael Bostic expects inflation to continue to fall and approach the Federal Reserve’s 2 percent target in 2025, doing so “in a very gradual way.”
Bostic told the Federal Reserve Bank of Atlanta’s Economy Matters podcast that in the first quarter of 2024, “the numbers didn’t always go in a straight line.”
“I think we’re going to see a bit of that through 2025, so there are going to be some times when it may look like things are stalling, and there’ll be some times when maybe it looks like inflation is moving maybe more aggressively,” Bostic said, according to a transcript. “And given that kind of bumpiness in the measures, I think that will call for our policy approach to be more cautious—because we don’t want to overreact to any one data point in an environment where things may bounce around considerably.
“I want to make sure we get the right signal, and make sure that our policy is calibrated to that right signal. And if we’ve got to err, I would err on the upside,” Bostic added. “I would want to make sure—for sure—that inflation gets to 2 percent, which means we may have to keep our policy rate higher longer than people might expect, or we may have to be more deliberate in the pacing of reducing our policy. So on net it’ll be higher, even as we’re higher than an original baseline on what that movement of 2 percent might look like.”
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