“The specific place that the economy will land depends critically on the details of where policy lands,” Bostic said, speaking at Emory University. “And because we don’t know that now, again, that’s another reason why I feel like moving too boldly with our policy in any direction wouldn’t be prudent at the moment.”
Tariffs are likely to push up on prices, Bostic said, meaning that it will take longer than he had earlier thought, perhaps until 2027, to get inflation back down to the Fed’s 2% goal. At the same time, economic growth will likely slow, with GDP growing more than 1% this year, less than half the recent pace, he said.
Bostic did not say whether he still believes the Fed will cut interest rates once this year, the view he had expressed in March.
Since then, U.S. President Donald Trump has announced tariffs on dozens of countries, and then proceeded to roll back some of the new tariffs temporarily even as he ratcheted up import levies on China, which has retaliated with big tariffs of its own.
The result, analysts say, is that tariffs on U.S. imports now average out at about 25%, about tenfold what they were when Trump took office in January. It is unclear if tariffs will remain there. Trump on Monday, in his latest shift, floated possible exemptions to his auto tariffs, even as the administration opened investigations into pharmaceutical and chip imports, a move that could presage fresh tariffs. “I think the fog has just gotten really, really thick,” Bostic said. “The economy is in a big pause position and we’ll just have to see sort of how things evolve.”
