MW Fed's Bostic expects no rate cuts in 2026 due to worries GOP tax bill might fuel inflation

By Greg Robb

The president of the Atlanta Federal Reserve bank warns not to be too hasty to call the inflation beast slain

Atlanta Fed President Raphael Bostic is stepping down at the end of February.

The Federal Reserve will likely not be able to lower interest rates next year, as the Republican tax bill passed last summer is likely to put upward pressure on inflation, Atlanta Fed President Raphael Bostic said on Tuesday.

In a talk with reporters and in an essay published on his regional bank's website, Bostic said he thought the economy was no longer in danger of a sharp rise in the unemployment rate that might spur a recession.

Economic growth should be stronger next year than this year due to a rebound following the record-long government shutdown as well as to some stimulative policies in the tax bill, he said.

"A lot of that stuff is about to come through and I think that is going to put some wind under the sails of the economy ... and likely to put some upward pressure on inflation," Bostic said.

"I didn't pencil in any cuts" next year, he said, because the Fed is going to have to maintain downward pressure "just to hold the line" on inflation.

Earlier fears that a potential recession was on the horizon have evaporated, he added.

The Fed cut its benchmark interest rate for the third straight meeting last week, bringing it down to a range of 3.5% to 3.75%.

Bostic, who is not a voting member of the Federal Open Market Committee this year, said he didn't support the decision to cut.

He said the risk of continued high inflation was a bigger worry than the slumping labor market.

Many companies say they are going to raise prices in 2026 given the higher costs they are paying for materials, he said. These plans for higher prices are not limited to "tariff-focused firms."

"I do worry we not be too hasty to call the beast slain, but rather stay committed to doing our risk management on price stability to make sure it doesn't get away from us," he said, adding he doesn't expect inflation to drop down to the Fed's 2% target until 2028.

Bostic announced his retirement in November, saying he'll leave his post when his term expires in February. His term was not without controversy: He was one of several officials who violated Fed rules governing when officials can trade securities.

-Greg Robb

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December 16, 2025 15:38 ET (20:38 GMT)

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