Federal Reserve Bank of Atlanta President Raphael Bostic has revised his forecast on interest rate cuts, now projecting only one cut instead of two due to tariff increases slowing progress on reaching the target inflation rate. Bostic mentioned in an interview with Bloomberg Television that inflation is expected to fluctuate and not reach the 2% target smoothly, thus delaying the need for policy adjustments. His new estimate suggests that the 2% inflation goal will be achieved in early 2027, aligning with his colleagues' projections. The latest predictions indicate that policymakers are leaning towards a half percentage point decrease in rates this year, although some are considering no cuts at all.

Bostic highlighted the challenges in economic forecasting caused by President Trump's unpredictable policy shifts. Despite this uncertainty, Bostic anticipates a 1.8% GDP growth rate for the US in 2026, down from the previous estimate of 2.1%. He also expects the unemployment rate to stay strong by historical standards, hovering around 4.2% to 4.3% by year-end. Bostic acknowledged the potential for increased inflation due to additional tariffs and risks to employment from changes in sentiment and layoffs. However, he emphasized the need to wait for policy changes to be implemented before adjusting forecasts to reflect any potential impacts.

Federal Reserve Chair Jerome Powell, following the decision to maintain interest rates last week, reiterated the Fed's cautious approach towards rate adjustments. Powell believes the US economy remains robust despite fluctuations in consumer sentiment. He expressed confidence that any inflationary effects from tariffs would be temporary, allowing officials to monitor the labor market and consider rate cuts if necessary, as long as long-term inflation expectations remain stable.