Atlanta Federal Reserve President reiterates cautious stance, still expects only one rate cut in 2025
Atlanta Federal Reserve President Bostic reiterated his cautious monetary policy stance, expecting only one rate cut in 2025 and three more in 2026. He emphasized that the Federal Reserve has enough patience to observe the situation in the current economic environment, with a robust labor market. Bostic also mentioned that the impact of tariffs on the economy carries a high degree of uncertainty, and inflation risks have not fully transmitted to the real economy. Meanwhile, manufacturing activity in Texas remains weak, although future expectations have improved
According to the Zhitong Finance APP, Raphael Bostic, President of the Federal Reserve Bank of Atlanta, stated on Monday that he still expects only one interest rate cut in 2025 and three more in 2026, reiterating his cautious stance on the current monetary policy path.
At an event hosted by Market News International, Bostic said, "I still stand by my original judgment," referring to his expectation of only one rate cut this year. He added that he has "reserved" space for three rate cuts next year.
Bostic emphasized that in the current economic environment, the Fed "has enough patience to observe the situation before taking action." "The labor market remains very robust, and we can indeed afford to wait a bit," he said, noting that there is still time to see how the economy evolves before acting.
When asked about the impact of tariffs on the economy, Bostic pointed out that while early policy signals have helped businesses somewhat adapt to the process of increased tariffs, there remains a high degree of uncertainty regarding trade policy direction. "It is still difficult to determine the ultimate direction of trade policy, and the market needs time to see the full picture." He specifically warned that the inflation risks triggered by tariffs remain an "open question," stating that "a significant amount of tariff-related price effects have yet to fully transmit to the real economy."
Bostic also noted that policy uncertainty is not limited to the trade sector. He pointed out that the public generally hopes for stable monetary policy, and frequent changes in policy stance can undermine market confidence.
Meanwhile, U.S. regional economic data shows that manufacturing activity in Texas remains weak. According to data released by the Dallas Fed on Monday, the Texas Manufacturing Business Activity Index recorded -12.7 in June, which, while still in contraction territory, improved from -15.3 in May, indicating a slight narrowing of the contraction.
Despite the overall weak economic sentiment, businesses' expectations for the next six months have improved. The future output index for June fell from 31.6 to 22.6, but the overall future business activity index rose from 1.4 to 14.4, slightly above the historical average.
Specifically, the production index slightly rebounded to +1.3 (previous value +0.9); the capacity utilization index was -1.0 (previous value -1.5); the new orders index was -7.3 (previous value -8.7); and the business outlook index was -8.9 (previous value -11.3)
