Atlanta Fed chief cites fog of uncertainty, urges caution on bold moves

Without knowing that, “I feel like moving too boldly with our policy in any direction wouldn’t be prudent,” he said.

The Fed kept its benchmark interest rate unchanged last month, its second meeting in a row that the institution has kept its interest rate at about 4.3%, as the central bank waited to see how Trump’s policies impacted the economy.

The scale of uncertainty is far greater than it used to be, making it difficult to make predictions about what will happen, Bostic said.

“I think what we have right now is a period where the range of possible outcomes has kind of multiplied, and the boundaries and the guardrails that I used to have in my head about what could possibly happen have all kind of been blown up,” Bostic said at the event. “And so now we’re in an environment where a much wider range of things could happen. And the unexpected seems to be happening on a regular basis.”

“We can talk tariff policy, but this is happening in a wide range of sectors, and it’s been happening for many years,” he said.

He noted the COVID-19 pandemic and war in Europe were also outside the range of normal expectations.

Earlier this month, Trump announced “reciprocal tariffs” of at least 10% on most every country, with dozens of countries facing far higher levies. Then last week, in the face of a meltdown of stock and bond markets, Trump paused many of the heftiest levies, except for on China, which saw tariffs of up to 145%.

Then late Friday, the administration paused tariffs on Chinese made electronics and semiconductors and other high tech components, though late Monday the administration announced a trade investigation that could lead to such products facing steep tariffs again.

The Federal Reserve is the U.S. central bank that decides the country’s monetary policy, with Atlanta as one of the Fed’s 12 district banks. The Fed’s mandate is to manage employment and pricing independent from political interference.

Consumer prices rose just 2.4% in March from a year earlier, the Labor Department said last week. That is the lowest inflation figure since September, and down from 2.8% in February.

But because tariffs drive prices up, Bostic said he now expects it will take longer to reach the Fed’s target inflation rate of 2%.

“Now this is probably end of (20)25, middle of ’26 — now going to ’27,” which he called “acknowledgment that we’re seeing forces that are pushing out in a way that’s going to make the fall of inflation be a bit slow.”

Bostic also said he expects to see economic growth this year at greater than 1%, down from more than 2%.

“But we really have to see what happens,” he added. “I think the key in all of this will be what the policy actually winds up turning out to be over the longer run.”

Tariffs could begin to show in prices in June, according to Richmond Fed President Tom Barkin in an interview with Axios. That’s because companies typically have 30 to 60 days of inventory to work through, Axios reported last week.

Bostic spoke during a fireside chat at the Emory Conference Center Hotel to a crowd of economics students and professors at their department’s annual awards banquet.

He noted Atlanta-based Delta Air Lines declined to give a full-year forecast during its most recent earnings call. “They’ve taken it off the table. … So if that becomes something that is more broadly done, then we’re talking about like, big time uncertainty, because we’re not getting signals from the folks who are deep in the middle of decision making, how products get produced and where goods need to be provided and how services are going to be provided,” Bostic said.

“It’s very hard for me to feel like I’m in a position where I can boldly move in any direction, and instead, need to really just wait for a little more clarity, get a little more sense of where things are likely to go, and then we can decide where that is,” he said.

He used the analogy of driving into fog, when a motorist would slow down or pull over to wait for it to clear up. “I think the fog has just gotten really, really thick. It’s very hard to see very far into the future. And so that means for me, I want to pull over,” Bostic said.

Businesses and consumers are not comfortable making big investments. “The things that we’re learning is that the economy is in a big pause position, and we’ll just have to see sort of how things evolve,” Bostic said.

Many businesses, Bostic said, are also holding tight on cutting jobs or hiring.

“I think businesses are somewhat scarred from the period during the pandemic when they felt like any person that left, it was incredibly difficult to find someone at the same quality to replace them,” he said. But there’s also too much uncertainty for many businesses to hire.