There’s a significant risk that a rate cut from the Federal Reserve could rekindle inflation, Atlanta Fed president Rapahel Bostic said on Monday.
In an essay published on the Atlanta Fed’s website, Bostic argued that the Fed should take a cautious approach to the economy, cognizant that the danger of higher inflation remains and easing monetary policy could fan the flames of rising prices.
In particular, Bostic warned that a premature rate cut could trigger a surge of business activity that would raise demand and push inflation higher.
“I asked one gathering of business leaders if they were ready to pounce at the first hint of an interest rate cut,” Bostic said. “The response was an overwhelming ‘yes.’”
Fed officials began the year expecting to cut interest rates at some point in 2024. The projections of Fed officials released after their December meeting…
