Fed’s Bostic Warns Against Further Rate Cuts Amid Inflation Risks

Atlanta Federal Reserve President Raphael Bostic warned that additional interest rate cuts could push US monetary policy into an accommodative stance that risks reigniting inflation.

Bostic said that further easing could worsen already elevated price pressures and destabilize inflation expectations among businesses and consumers, potentially undermining the effectiveness of monetary policy.

He acknowledged signs of softness in the US labor market but noted that the data do not point to a sharp downturn, suggesting recent shifts may reflect structural changes such as new technologies, immigration trends, and post-pandemic workforce adjustments.

At the same time, Bostic highlighted that inflation remains clearly above the Federal Reserve’s 2% target, with little evidence it will ease before mid-to-late 2026, and projected inflation could exceed 2.5% by the end of next year.

He cautioned that moving too quickly on rate cuts could damage the Fed’s credibility and make it more difficult to bring inflation back to target.