Federal Reserve Bostic: The US economy may experience a longer period of high inflation.

The Federal Reserve's Bostic said on Thursday that high inflation in the United States may persist for some time, which could seep into consumer psychology. Businesses may need a year or more to adapt to the changes happening in trade and other policies. This implies a reason to maintain patience before cutting interest rates. He said, "The main conclusion is that adjustments to prices and the broader economy due to US trade and other forthcoming policies, as well as geopolitical developments, will not be as short-lived and simple as implied by standard textbook models of one-time price changes." "Instead, it seems increasingly like a process that may take a year or longer to fully end." "If I am right, then the US economy may experience high inflation for a longer period of time." Bostic said, "I expect prices to not spike sharply, but rather to rise steadily," which may seep into consumer inflation expectations, presenting a greater challenge for the Federal Reserve. He also said that the non-farm data released on Thursday showed that new job additions exceeded expectations, and the unemployment rate slightly dropped to 4.1%. "Overall, the labor market conditions remain healthy," and there are no signs of deterioration that may require preemptive rate cuts. He stated that the high uncertainty in employment, economic growth, and inflation direction is "not the time for a major monetary policy shift," and he believes the current wait-and-see attitude of the FOMC is still appropriate.