Atlanta Fed President Raphael Bostic conveyed a cautiously hawkish tone in his latest remarks, reflecting a complex and evolving economic backdrop. He noted that while the fundamentals of the U.S. economy remain solid, the outlook is for continued slowing, accompanied by real uncertainty around the implications for jobs and inflation. He highlighted that businesses are still in a wait-and-see mode on employment, and that stress on lower-income consumers is mounting as excess pandemic savings have been depleted. Although labor market conditions in the Southeast remain resilient, Bostic acknowledged that recent downward revisions to jobs data, particularly in the July report, suggest the labor market may not be as tight as previously thought. This has prompted a reassessment of the Fed’s progress on its employment mandate and raised the question of whether the U.S. is still at full employment.

Bostic warned that tariffs could place upward pressure on prices for the next six to twelve months, adding complexity to the Fed’s inflation outlook. He stressed that tariffs can’t be dismissed as transitory, as they are designed to produce structural shifts that could lead to more persistent inflationary effects. He emphasized that the most important question now is whether these price shifts will be one-time or sustained. While businesses are adapting with a variety of pricing strategies, Bostic believes the tariff episode is likely to last longer than expected and will require close monitoring.

On policy, Bostic reiterated that he still sees one rate cut this year as appropriate, though he emphasized that much data remains before the Fed’s September meeting. He also noted that federal debt issuance may siphon off liquidity, adding another element the Fed must watch. Despite recent challenges, Bostic expressed hope that price pressures will ease by mid to late 2026.