In a virtual discussion organized by the Florida Institute of CFOs, Bostic said he remains skeptical that inflationary effects induced by President Donald Trump’s tariffs will be temporary.
Atlanta Fed President and CEO Raphael Bostic on Thursday said that he expects the Federal Reserve to cut interest rates only once in 2025.
In a virtual discussion organized by the Florida Institute of CFOs, Bostic said he remains skeptical that inflationary effects induced by President Donald Trump’s tariffs will be temporary, according to a Bloomberg report.
“This question about whether tariffs are a one-time thing, or whether they’re going to be more persistent in their effects and might even cause structural changes, I think is perhaps the most important question that we have today,” Bostic said, according to the report.
Bostic wondered if President Trump’s tariffs fit the textbook definition of these levies, and expressed skepticism about whether the resulting inflation would be a one-time affair. The Atlanta Fed chief also pointed to the dynamic nature of Trump’s tariff policies, adding that there could be strategic adjustments in 2026.
“This has not been a one-time thing where you wake up on one day and everybody knows what all the tariffs are,” Bostic said, according to the report.
According to CME Group’s FedWatch tool, there is a 91.2% probability of the central bank slashing interest rates by 25 basis points at the Federal Open Market Committee’s (FOMC) September meeting. This would bring down the interest rates to the 4% to 4.25% range.
Meanwhile, U.S. equities traded mixed in Thursday’s midday trading session as President Trump’s reciprocal tariffs deadline kicked in. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.11%, while the Invesco QQQ Trust (QQQ) gained 0.4%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘neutral’ territory.
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