Federal Reserve Bank of Atlanta President Raphael Bostic emphasized his worries over inflation as he repeated his expectation for one interest-rate cut this year.
"Given the trajectory of our two mandates, our two charges, I worry a lot about the inflation side, and mainly because we're seeing expectations move in a troublesome way," Bostic said Monday during an interview with CNBC, referring to consumer expectations for the future rate of price increases.
Bostic said he wants to see the elevated levels of uncertainty,
"Today, things are very much in flux, there's a lot of uncertainty," Bostic said. "And what it means for me is before I want our policy to move in any dramatic direction we've got to let things sort out."
He added, "I'm leaning much more into one cut this year because I think it will take time."
Fed officials left their benchmark rate unchanged earlier this month and said there are greater risks of both higher unemployment and inflation. Fed Chair Jerome Powell emphasized the central bank is not in a rush to lower rates.
Bostic said the decision by Moody's Ratings on Friday to
"With that downgrade, it will have implications for the cost of capital and a bunch of other things, and so it could have a ripple through the economy," he said.
The Federal Reserve is reviewing its
Fed Chair Jerome Powell, speaking at a Federal Reserve Board research conference in Washington last week, said both financial market participants and academics generally approve of how the Fed conveys policy decisions and explains forecasts, but "there is always room for improvement."
"A critical question is how to foster a broader understanding of the uncertainty that the economy generally faces," he said. "In periods with larger, more frequent, or more disparate shocks, effective communication requires that we convey the uncertainty that surrounds our understanding of the economy and the outlook."
Powell said the Federal Open Market Committee would consider ways to improve on this front before finalizing its new policy framework this summer.
Along with communications, Powell said the review has also focused on the two most controversial elements of the Fed's last framework review: its interpretation of labor market dynamics and its focus on average inflation over an extended period.
Launched in 2019 and completed in 2020, the prior review largely focused on how monetary policy should adapt to a sustained zero-interest rate environment. The Fed's benchmark interest rate, the federal funds rate, had been at or near its lower bound for a decade and, Powell said, the belief was that it would remain in the range for the foreseeable future.
—Kyle Campbell contributed to this article.
