Atlanta Fed president Bostic to retire in February
Atlanta Federal Reserve president Raphael Bostic announced Wednesday that he will retire at the end of February when his current term ends.
Bostic has been at the helm of the Atlanta Fed since 2017. He is the first African American and openly gay president of a regional Federal Reserve Bank in its 111-year history.
“It has been a privilege to serve alongside President Bostic,” Fed Chair Jerome Powell said in a statement. “His perspective has enriched the Federal Open Market Committee’s understanding of our dynamic economy. And his steady voice has exemplified the best of public service — grounded in analysis, informed by experience, and guided by purpose. His leadership has strengthened our institution and advanced the Federal Reserve’s mission.”
Bostic has remained hawkish for most of this year as he worries about sticky inflation.
While announcing his retirement, Bostic said in a policy speech on Wednesday that while it’s an “extremely close call,” he believes inflation is a more “urgent risk” than the job market right now.
Bostic said he sees little to suggest that price pressures will dissipate before mid- to late 2026, at the earliest.
He underscored that inflation has remained above the Fed’s 2% goal for nearly five years. And based on the last Consumer Price Index (CPI) reading, which showed inflation was running at 3% in September, he estimates the Fed’s preferred inflation gauge — the Personal Consumption Expenditures index — is running about 2.7%.
Atlanta Federal Reserve president Raphael Bostic attends the Kansas City Fed’s annual economic symposium in Jackson Hole, Wyo., on Aug. 24, 2024. (Reuters/Ann Saphir) ·REURERS / Reuters
Bostic stressed that “core” services prices — those excluding energy services — have defied most forecasters’ expectations and remained elevated above pre-pandemic levels. At the same time, he noted that this spring, core goods prices began climbing as tariffs kicked in, marking a reversal from last year when price increases stemmed from housing as core goods prices were actually dropping.
“We cannot breezily assume inflationary pressures will quickly dissipate after a one-time bump in prices from new import duties,” Bostic said in a speech in Atlanta. “Across all our information sources, I see little to no evidence that we should be sanguine about the forward trajectory of inflation.”
In the absence of official government data due to the shutdown, Bostic said he is relying on surveys the Atlanta Fed conducts, including the Business Inflation Expectations survey, the CFO Survey in partnership with the Richmond Fed and Duke University, and the Survey of Business Uncertainty with economists from Stanford University and the University of Chicago — all of which, he said, have proven to be reliable gauges and predictors of the economy and prices.
When it comes to the job market, Bostic said he views the signals as “ambiguous and difficult to interpret.”
“They are not clear enough to warrant an aggressive monetary policy response when weighed against the more straightforward risk of ongoing inflationary pressures,” he said.
He said the headline unemployment rate — sitting at 4.3% — is characteristic of a balanced labor market.
Bostic said he thinks the job market may be “shifting” rather than weakening, based on what he thinks are long-term changes like lower immigration.
Foreign-born workers have accounted for the bulk of US labor force growth in recent years because fewer native-born Americans have joined the workforce, according to data sourced by the Atlanta Fed. Consequently, Bostic said shutting off migration will inevitably have important implications for the job market.
At the same time, Bostic said the majority of his business contacts tell him their hesitation to add to payrolls stems from cost increases across a range of business expenses: materials, insurance, healthcare, utilities, various services, and labor. In most cases, firms lack or have exhausted easy ways to offset the cost shocks, he said. They can’t lean solely on price increases, as customers have become increasingly price-sensitive. So, firms have turned inward in the search for expense reduction, and for most businesses, labor is the largest expense.
Bostic, who is not currently a voting member, said he was convinced by his colleagues to cut interest rates last month, even as he acknowledged that he has been on record for most of the year arguing for only one rate cut.
He warned last month that the Fed cannot forget that “inflation is a significant problem and we have to get that back down to our 2% target. I think we can still do it, but with each step, we get closer and closer to neutral in ways that make me uncomfortable,” he said.
The Atlanta Fed’s board of directors will form a search committee comprised of non-banking members of its board to conduct a nationwide search for the next president of the regional bank.
Jennifer Schonberger covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
