Atlanta Federal Reserve Bank President Raphael Bostic reiterated the importance of maintaining interest rates at a level that can restrain economic activity and bring inflation back to 2%.

"What I have learned is that we really do not want inflation to become entrenched," Bostic said in an interview on Friday. "Once inflation becomes ingrained in people's minds, it changes how the economy evolves. That is one reason I believe we need to keep policy in a restrictive stance to pull inflation back to 2%. It is absolutely critical."

Bostic, who is set to step down at the end of this month, expressed cautious optimism about this year's economic outlook. He cited fading impacts from tariffs and a potential boost from tax cuts passed by Congress last year.

He also downplayed recent pessimistic reports on hiring and layoffs, noting that due to the government shutdown, policymakers may need several months to clearly assess the health of the labor market.

"We haven't been getting the data in a timely manner," he said. "My team tells me that we won't start getting clear signals from the data, and truly understanding what is happening, until April or May."

Last week, during their first policy meeting of the year, Federal Reserve officials paused interest rate cuts, citing signs of stabilization in the labor market. Since that meeting, several Fed officials who have spoken publicly have indicated they remain concerned about persistently high inflation.

Earlier this week, Bostic stated that he does not anticipate interest rate cuts in 2026. He is scheduled to retire from the Federal Reserve at the end of February.

Separately, President Trump announced last week his intention to nominate former Fed Governor Kevin Warsh to succeed Jerome Powell as Chair of the Federal Reserve. Powell's term as Chair ends in May.