Atlanta Federal Reserve President Raphael Bostic Believe that an interest rate reduction in July would be prematurely. Even due to the upcoming meeting in the next month, the Fed would still not have enough data to understand what is happening with inflation after the new tariff regime of the USA.
“I don’t believe interview. “We will only have a level of inflation. We will have a lot that is unknown, how other guidelines influence the labor market. And without this kind of clarity, I don’t think that it will be appropriate to move in any direction at this point.”
What exactly will happen to inflation is the central question for the central bank.
Bostic said it was clear that companies would increase prices, but that it was “still quite unknown” if they would do it. “You make a model and have to change it tomorrow and the day and the day after,” he said.
According to textbook economy, tariff policy leads to a unique inflationary shock. But that’s theory, not practice. And the current practical realities of the economy are far from the textbook. The stock exchange was crashed to the all -time high in a month and a half this spring. The USA alienated practically all of its trading partners and then conveyed restless ceasefire, with most of them, while they were historically high tariffs. At the same time, the public still stirs from the continuing inflation.
All of this ensures an uncertain view with a little historical precedent. That is why some lined officials, including the chairman Jerome Powell, have preached the merits of patient Before you decide to reduce prices.
During a hearing of the congress last week, Powell repeated that the Fed was “well positioned to learn more about the probable economic course” before making changes to interest rates.
Powell’s strategy to wait for further economic data brought President Donald Trump’s anger. Since Trump repeated the office in January in January, he has regularly criticized The repeated decisions of the FED too Keep interest rates stable. His social media contributions that Powell make out have become an integral part of monthly Fed meetings. On Monday, Trump made a list of the central bank’s interest rates from other countries in which he had crossed that the US tariffs should be “much” lower.
During his certificate, however, Powell gave some references to a potential schedule for reduction in installments. The summer months – June, July and August – would be crucial, because then the FED officers expect the earliest signs of The effect of tariffs on inflation.
“We expect it to be moved in summer, and when we see that it doesn’t happen, we will learn from it,” Powell told the members of the congress.
When inflation moves up this summer, as the Fed expects, it waits until it subsides to reduce interest.
However, if the prices do not increase significantly due to inflation, the Fed could reduce interest earlier, said Powell. The other change that could lead to an earlier reduction in installments could be an increase in the unemployment rate.
Several other Fed officials such as San Francisco Fed President Mary Daly and New York Fed President John Williams also preferred it before they lower the tariffs. However, this view is not all shared at the Fed. Governor of the Federal Reserve Michelle Bowman And Christopher Waller In the past few weeks, they believed that a reduction in installments in July was appropriate because inflationary tips would be rather short -lived than persistent.
And while Powell avoided giving a certain date when the Fed reduces interest, his comments made the time for the different scenarios with which the US economy was confronted. Summer will be an evaluation period. What follows in autumn – either a installation cut or a stop – can be seen. Until then, the decision about the tariffs would probably have to wait.
Companies also urge their own decisions about how they can best react to tariffs. Bostic said many of the companies he spoke to told him that they had been waiting for a clearer economic image. According to BOTIC, some companies said that they experimented with various approaches to see how consumers would react and that the final strategies may not be present until 2026.
“So this could be a much longer time to recognize the full effects of all of this,” said Bostic.
