Federal Reserve Bostic: The US economy may experience longer periods of high inflation

According to a report by Golden Finance, the Federal Reserve's Bostic said on Thursday that high inflation in the United States may continue for a period of time, which could penetrate into consumer psychology, and businesses may need a year or more to adapt to changes in trade and other policies. This suggests a reason to be patient before cutting interest rates. He said, "The main conclusion is that price and broader economic adjustments to US trade and other upcoming policies, as well as geopolitical developments, will not be short-term and simple one-time price changes as implied by the standard textbook model." "On the contrary, this looks increasingly like a process that may take a year or more to fully end." "If I am right, then the US economy may experience longer periods of high inflation," Bostic said. "I don't expect prices to soar significantly, but steadily rise," which could seep into consumer inflation expectations and pose greater challenges to the Federal Reserve. He also stated that the non farm payroll data released on Thursday showed that the number of new jobs added exceeded expectations, and the unemployment rate slightly dropped to 4.1%. "The overall labor market situation remains healthy," and there are no signs of deterioration that may require preemptive interest rate cuts. He stated that the current high level of uncertainty in employment, economic growth, and inflation direction is not the time for a significant shift in monetary policy, and he believes that the FOMC's current wait-and-see attitude is still appropriate.