Atlanta Fed’s Venable says inflation too high, easing hinges on Middle East

Inflation remains too high for comfort, Atlanta Federal Reserve President Raphael Bostic warned on Wednesday, with any prospect of easing tied to developments in the Middle East.

Speaking at an event in Atlanta, Bostic emphasized that while progress has been made in reducing inflation from its mid-2022 peaks, price pressures remain elevated compared with the Fed’s 2% target. The central bank’s preferred inflation gauge, the personal consumption expenditures (PCE) index, has shown signs of moderating but continues to fluctuate amid persistent supply chain and labor market dynamics.

The Fed’s policy path is increasingly influenced by geopolitical risks, particularly in the Middle East, which could disrupt energy markets and global trade flows. Bostic noted that while the Fed does not target energy prices directly, sustained volatility in oil markets—driven by regional tensions—could prolong inflationary pressures or delay the return to price stability.

The Atlanta Fed chief reiterated the Fed’s commitment to bringing inflation sustainably down to 2%, even as the central bank navigates a delicate balance between supporting economic growth and controlling price increases. Recent data has shown mixed signals, with some indicators pointing to cooling demand in certain sectors while others suggest persistent wage growth and service-sector inflation.

Bostic’s remarks underscore the uncertainty surrounding the inflation outlook, as policymakers assess the interplay between domestic economic conditions and external risks. The Fed’s next policy decisions will likely hinge on incoming data and the evolution of geopolitical developments, particularly in the Middle East.