On Wednesday local time, Atlanta Federal Reserve President Raphael Bostic unexpectedly announced during his routine speech that he had decided to retire early at the end of February next year. Against the backdrop of growing skepticism within the Federal Reserve regarding interest rate cuts, this means that US President Trump has gained yet another opportunity to exert influence.
Reiterate a cautious stance
Atlanta Federal Reserve President Raphael Bostic, in prepared remarks for a speech at the Atlanta Economic Club, said he favored maintaining the current interest rate level until “clear evidence” emerged that inflation was falling back to the Fed’s 2% target. “I think the Committee’s current monetary policy is slightly restrictive, and therefore I favor keeping the federal funds rate stable until we see clear evidence that inflation is once again substantially moving toward the 2% target. In my view, this is an appropriate position in the current volatile environment.”
Bostic stated that when assessing the risks to the Federal Reserve's dual mandate of "price stability" and "strong labor market," the clearer and more pressing risk remains price stability. "I think the signals coming from the labor market are vague and difficult to interpret. Compared to the more immediate risk of persistent inflationary pressures, these signals are insufficient to justify an aggressive monetary policy response."
His remarks indicate that he remains firmly aligned with the "hawkish" policymakers within the Federal Reserve.
A housing expert, Bostic has served as president of the Atlanta Federal Reserve for eight years. In the Fed's 111-year history, Bostic is the first person to serve as president of a regional Federal Reserve bank. The president is Black. His tenure was overshadowed by a 2022 trading scandal: he failed to disclose certain financial transactions in his statutory reports, including some during the COVID-19 pandemic—a period when the Federal Reserve was taking unconventional measures to boost the economy. An investigation by the Federal Reserve Inspector General determined that Bostic's actions violated internal Fed rules but not any laws. Bostic stated that he did not personally execute these transactions.
Federal Reserve Chairman Jerome Powell said in a statement Wednesday that it was an "honor" to work with Bostic, noting that Bostic's voice was solid in policy discussions and that his leadership strengthened the Fed and propelled its mission forward.
The Atlanta Federal Reserve Board of Governors will reportedly form a search committee, comprised of members with non- banking backgrounds, to identify a potential successor nationwide. The committee's final decision will require approval from the Federal Reserve Board of Governors in Washington.
Key Points of Personnel Appointments
It is foreseeable that the nomination of the Atlanta Fed president will receive more attention, as US President Trump has made it clear that he is seeking greater control over the Fed, partly because he wants to see the Fed cut interest rates.
In August, Trump attempted to fire Federal Reserve Governor Lisa Cook from the Fed's board, but the move has been stalled—the U.S. Supreme Court is scheduled to hold a hearing in January on the legality of his action. Trump will have the power to choose his successor after Fed Chair Jerome Powell's term ends in May.
Unlike the Federal Reserve Board of Governors, the presidents of the 12 regional Federal Reserve Banks are reappointed every five years, with a new round of appointments scheduled for March next year. It's important to note that the 12 members of the Federal Open Market Committee (FOMC), which participates in interest rate voting, include seven Federal Reserve Governors and five regional Federal Reserve presidents (the New York Fed has permanent voting rights, while the other four rotate annually).
In an interview with CBN, Boris Schlossberg, macro strategist at BK Asset Management, said that for Trump, Bowman, Milan, and Waller are his nominees on the Federal Reserve Board of Governors. After May next year, the new Federal Reserve Chairman will take office, giving the US president a majority on the Board.
He analyzed that these measures might not be enough to push for further interest rate cuts, as a simple majority requires the approval of at least seven voting members. Therefore, the key is to get more regional Fed presidents involved. This makes the election early next year quite interesting.
In fact, the Trump administration is weighing options that could affect regional Federal Reserve banks and is increasing scrutiny of how regional Fed presidents are selected. Unlike Federal Reserve governors, regional Fed presidents are not nominated by the White House and do not require Senate confirmation. David Wessel, a senior fellow at the Brookings Institution, noted in a recent report that the Federal Reserve Board in Washington has the power to replace any regional Fed president, although the institution has never done so before.
As previously reported by CBN, the Federal Reserve Board's assessment of regional Federal Reserve presidents next year may prevent officials deemed too hawkish from reappointing, thus paving the way for future interest rate cuts. Wall Street believes that officials in a "dangerous" position may include Chicago Fed President Austan Goolsbee, San Francisco Fed President Mary Daly, and Atlanta Fed President Bostic. Now, Bostic will avoid this reappointment process.
(Article source: CBN)
