Fed’s Bostic Says Rate Cuts Can Wait, Expects Price Hikes Later In 2025: Here’s What He’s More Concerned About

Atlanta Federal Reserve President Raphael Bostic on Tuesday reiterated his stance on interest rate cuts, calling for patience to see how businesses adjust to U.S. President Donald Trump’s tariff policies.

In an interview with Reuters, Bostic said the job market is stable and inflation remains a risk, aligning with Federal Reserve Chair Jerome Powell’s assertion that uncertainty about the economic outlook has “diminished but remains elevated.”

Bostic thinks there is “some space and time” to see how President Trump’s tariffs and other policies evolve.

“I'm more concerned about what happens if we don't get to our 2% mandate. Because of that I'm willing to stay in this restrictive posture for longer just to be absolutely sure,” said Bostic.

The Federal Open Market Committee’s (FOMC) projections point to stagflationary pressures on the economy, with inflation expected to reach 3% in 2025, while the gross domestic product (GDP) is projected to grow at just 1.4%.

Bostic thinks that businesses could begin passing on the increased cost of inputs to consumers later this year as a result of inflationary pressures due to Trump’s tariffs.

“They tell me ‘I’m pretty sure I am going to have to raise my prices. The question is not whether but when,’” he stated.

He added that he sees only one 25-basis-point cut in late 2025, unlike Fed Governors Christopher Waller and Michelle Bowman, who expect rate cuts to begin as soon as July.

Both Waller and Bowman expressed concerns about weakness in the labor market as the primary reason for their expectation of a cut in July.

“If you’re starting to worry about the downside risk labor market move now don’t wait. Why do we want to wait until we actually see a crash before we start cutting rates?” Waller said.

Amid the rate cut debates, President Trump lashed out at Powell again on Tuesday ahead of the Fed Chair’s testimony in Congress.

“I hope Congress really works this very dumb, hardheaded person,” the President said in a post on Truth Social.

Meanwhile, U.S. equity markets surged on Tuesday amid signs of Israel and Iran de-escalating tensions in their 12-day war, despite reports of violations.

At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up 0.85%, while the Invesco QQQ Trust (QQQ) gained 1.12%. Stocktwits data shows the retail sentiment around the S&P 500 ETF has been in the ‘extremely bearish’ territory over the past week.

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Also See: Dow Futures Surge Even As Trump Says Israel, Iran Violated Ceasefire: Exxon, Lockheed Martin, Tesla, FedEx Among Stocks In Focus