Fed's Bostic says inflation is 'a lot' above the 2% target

Atlanta Fed President Raphael Bostic emphasized in his radio comments today that the Federal Reserve is 'laser focused' on returning inflation to its 2% target. He acknowledged that while the labor market is cooling, it is not fundamentally weak, describing the current environment as a 'no hire, no fire' dynamic. Bostic noted a growing tension between the Fed's dual mandates of price stability and maximum employment, highlighting that inflation remains significantly above target and is a primary economic challenge. He indicated that while high-end consumer spending remains resilient, lower-income households are facing increased stress following the end of pandemic-era supports. Additionally, he addressed supply-side pressures, noting that cost pressures extend beyond tariffs and mentioned specific labor stresses in sectors reliant on foreign workers. Bostic stated he has 'penciled in no further reductions' in rates until 2026, contrasting with a market expectation of 53 bps easing this year. In the short term, the odds of a cut rise to 50% in April due to recent non-farm payrolls data and a lower unemployment rate. Furthermore, he is set to retire on February 28, raising questions about his successor.