Fed Officials Highlight Economic Strength Amid Inflation Concerns and Fiscal Uncertainty

Atlanta Fed President Raphael Bostic (nonvoter) passionately shared in an essay that the US economy is on a strong path, yet the Federal Open Market Committee must stay alert to tackle any uncertainties that might shake this solid foundation.

St. Louis Fed President Alberto Musalem (voter) expressed concern about the rising inflation expectations and shifts in fiscal policy, which might compel the FOMC to maintain a restrictive policy longer than anticipated or even tighten it. He highlighted that the risk of stagflation—a mix of high inflation and slow growth—can't be dismissed.

Exciting recent comments:

(Feb. 19) Fed Vice Chair Philip Jefferson (voter) resonated with other Fed officials, emphasizing that the FOMC can afford to be patient when deciding the timing for the next rate reduction.

(Feb. 19) Minutes from the Jan. 28-29 FOMC meeting revealed that participants felt 'well positioned' to pause rate reductions given the uncertain fiscal policy outlook and still elevated inflation. The minutes highlighted that the FOMC seeks further inflation progress before considering more rate cuts, especially with fiscal policy decisions being uncertain. Data since the meeting have been reassuring, showing inflation is slowing and consumer price gains are accelerating.

(Feb. 18) San Francisco Fed President Mary Daly (nonvoter) emphasized that monetary policy shouldn't be eased further until we see more progress in reducing inflation.

(Feb. 17) Fed Governor Michelle Bowman (voter) expressed a desire to see more inflation progress before considering further rate reductions, noting greater risks to price stability as the labor market remains robust.

(Feb. 17) Fed Governor Christopher Waller (voter) stated that tariffs should only have a modest and temporary impact on prices, so they shouldn't hinder the FOMC's monetary policy decisions.

(Feb. 17) Philadelphia Fed President Patrick Harker (nonvoter) remarked that while inflation remains elevated, it's moving in the right direction. Combined with a balanced labor market, this suggests the FOMC should hold rates steady.