Federal Reserve's Bostic: Inflation will gradually decline, policymakers should remain cautious in decision-making

According to the Zhitong Finance APP, Raphael Bostic, President of the Atlanta Federal Reserve, stated that given the uneven progress in reducing inflation, officials should be cautious in their decision-making and tend to maintain high interest rates to achieve the goal of price stability. Bostic also mentioned that he expects the inflation rate to gradually decline to the Federal Reserve's target of 2% this year. He added that price pressures are expected to ease, although at times it may seem that progress is stagnating or inflation is intensifying. He stated, "Given the uncertainty of these measures, I believe this will require our policy tools to be more cautious." The Federal Reserve cut the federal funds rate for the third consecutive time last December, lowering it by a full percentage point since September of last year. However, at the same time, the dot plot released by the Federal Reserve in December indicated that policymakers expect to cut rates only twice this year, with each cut being 25 basis points. Bostic stated, "I want to ensure that we are getting the right signals and that our policies are calibrated based on the right signals. If we have to make a mistake, I would rather err on the side of caution. I want to ensure that the inflation rate reaches 2%, which means we may have to keep the policy rate higher than people expect." Federal Reserve Governor Lisa Cook also expressed similar views to Bostic on Monday. Cook stated that policymakers can be more cautious about rate cuts, citing a strong labor market and persistent inflation pressures. Cook said, "Since September of last year, the resilience of the labor market has strengthened, and the stickiness of inflation is greater than I had imagined at that time. Therefore, I believe we can be more cautious about further rate cuts." Cook added, "I have always envisioned taking quicker action in the early stages of easing policy, and then gradually relaxing as the policy rate approaches neutral." "Over time, I still believe it may be appropriate to adjust the policy rate towards a more neutral stance." Cook also stated that the U.S. economy is in "good shape" at the beginning of this year. She believes that given the relatively low unemployment rate and wage growth outpacing inflation, the job market is stable. In commenting on the significant cooling of price growth in recent years, Cook stated, "There is still a long way to go to reach the 2% inflation target. I still believe that inflation will gradually—albeit unevenly—return to the 2% target in a sustainable manner."