The job market may be cooling but the region’s top Federal Reserve official is more worried about higher prices.
In his most pointed comments in awhile, Federal Reserve Bank of Atlanta President Raphael Bostic staked out his position that it's inflation, not unemployment, that he is most concerned about.
“ I continue to believe that inflation is the more urgent and definitive risk to the US economy,” he said in a video statement accompanying his quarterly message.
Federal Reserve leaders are usually very even-handed in their economic analysis so as to give themselves as much discretion as possible when making decisions about short-term interest rates. But in his latest quarterly message released this week, Bostic didn’t mince words.
“Everybody knows that inflation is too high and it's been too high for almost five years. If it gets worse, then Americans who are already feeling a squeeze will face more economic pain,” he said.
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Bostic may have more liberty to speak his mind. He is due to retire from his position early next year and he does not have a vote on the central bank’s interest rate setting committee right now.
The group met last week and decided to cut its target interest rate by one quarter of one percent. The committee’s statement said it decided to cut borrowing costs because “downside risks to employment rose in recent months.”
The Fed has two directives known as the dual mandate – maximum employment and steady prices.
“ Both of them are under pressure,” Bostic said.
Fighting inflation would lead the Fed to raise interest rates, threatening to slowdown business investment and the housing market, among other effects.
The national job market has added a half million net new jobs since February. That average of 50,000 jobs per month is less than a third of the pace of new jobs one year earlier. Florida’s unemployment rate was 3.9% in September, the latest month for which data is available from the Bureau of Labor Statistics. That is up from 3.4% one year earlier.
The slowing job market has been seized upon in recent months by most voting members of the Federal Reserve Open Market Committee to justify cutting interest rates. At the same time, the bank’s favored inflation gauge, the Personal Consumption Expenditures Price index, has risen to 2.8%. And inflation has been running higher than the Fed’s 2% target for five years now.
“I see little to suggest that price pressures will dissipate before mid to late 2026, at the earliest, and expect inflation to remain above 2.5 percent even at the end of 2026,” Bostic wrote in his essay entitled “FOMC's Credibility on Inflation Could Be at Stake.”
He based his outlook on the Fed's survey of regional businesses in the southeast.
"Firms in our surveys expect to raise prices well into 2026, and by substantially more than 2%," he wrote. He noted the price hikes are not limited to companies directly impacted by President Donald Trump's tariffs.
