Atlanta Fed's Bostic Reaffirms Need for Restrictive Rate Policy Amid Persistent Inflation

Atlanta Fed President Raphael Bostic reiterated on Wednesday that the Federal Reserve should continue its restrictive monetary stance, emphasizing that interest rates remain too low to fully address inflation pressures. Speaking at a panel discussion in Washington, D.C., Bostic noted that while inflation has moderated from its 2022 peak of 9.1%, the core personal consumption expenditures (PCE) index still stands at 3.4% year-over-year, well above the Fed’s 2% target. Bostic highlighted that inflation expectations and wage growth remain elevated, with the 12-month change in hourly earnings at 4.1%. He cautioned that premature rate cuts could jeopardize the progress made in taming inflation. The Fed’s policy rate, currently in a range of 5.25% to 5.50%, has been held steady since July 2023, with no indication of a reduction in the near term. Markets have priced in a 60% probability of a rate cut in the second quarter of 2026, according to CME Group’s FedWatch tool. However, Bostic’s remarks suggest that the central bank’s focus remains on achieving sustained inflation control. He stressed that the labor market, while cooling slightly, remains tight, with the unemployment rate at 3.9%—a level that continues to support upward pressure on wages and prices. The Federal Open Market Committee (FOMC) is scheduled to meet again in March 2026. Investors, financial institutions, and corporate treasurers are closely monitoring Bostic’s statements as they assess the likely trajectory of borrowing costs. A delayed rate cut could affect mortgage rates, consumer lending, and capital spending decisions across sectors including real estate, technology, and manufacturing.