Atlanta Federal Reserve Chairman Bostic recently stated in a media interview that the Federal Reserve needs to remain stagnant until at least this summer to prevent further price increases.

The regional Federal Reserve chairman, who will rotate to obtain voting rights for FOMC this year, said that if policymakers cut interest rates too early, inflation rates may "fluctuate". He also warned that the pace of the US inflation rate falling towards the 2% target may slow down in the coming months.

After soaring to the highest level in decades of over 9% in the summer of 2022, the US inflation rate sharply fell in the second half of last year, paving the way for Federal Reserve rate makers to consider lowering borrowing costs from the current 23 year high of 5.25% -5.5% this year.

However, in recent years, Bostic, who has taken a dovish stance within the Federal Reserve, has stated that he "expects the progress of future inflation (decline) to be much slower". He also pointed out that there is a risk that inflation (downward momentum) may completely stagnate.

It is reported that Bostic was interviewed before the release of the US December CPI data last Thursday, and the relevant content was released over the weekend. The data released by the US Department of Labor last Thursday showed that the year-on-year increase in US CPI in December rebounded from 3.1% in November to 3.4%, higher than market expectations of 3.2%.

Although the Atlanta Fed Chairman admitted that the rate of decline in US price pressures last year exceeded his expectations, he still believes that inflation rates may still remain around 2.5% by the end of 2024 and will not fall back from the Fed's target of 2% until 2025.

After the Federal Reserve's decision in December, Bostek stated that he believed the current high interest rates at the Federal Reserve needed to be maintained at least until the summer. And he still maintains this view at the moment, stating that the uncertainty facing the US economy requires such a cautious attitude.

Bostic said, "Inflation must firmly return to our 2% target. If we start to loosen policies and inflation fluctuates like a seesaw, it will be a bad result. This will weaken people's confidence in the direction of the economy."

According to the current quantitative tightening plan (QT) of the Federal Reserve, the Federal Reserve allows up to US $60 billion of US treasury bond bonds and up to US $35 billion of institutional bonds to "expire and not renew" every month. Some people believe that this policy may ultimately trigger a surge in the US financing market. Federal Reserve officials were taught a lesson in 2019 when overnight market interest rates surged fourfold to 10%, forcing the Federal Reserve to take emergency intervention measures. Regarding this, Bostic said, "Currently, we have not really seen any movement in the money market, indicating that we are approaching a situation where bank reserves are no longer sufficient."

But he also mentioned, "Obviously, at some point, there will be a signal that we will be closer to that critical point, and we will have to make some considerations.".