By Howard Schneider
WASHINGTON (Reuters) -Recent data on consumer inflation showed price pressures may be building in the wake of rising import taxes imposed by the Trump administration, Atlanta Fed President Raphael Bostic said on Wednesday.
"We may be at an inflection point," Bostic said in comments to Fox Business' Claman Countdown, a day after data for June showed prices rising faster than the month before with particularly large increases for some categories of heavily imported goods. "The headline
number moved away from our target, not towards it...We've seen the highest increase in prices that we've seen all year."
The Consumer Price Index rose 2.7% in June compared to 2.4% in May. Bostic noted that nearly half of the products showed an increase of 5% or more, nearly double the share seen in January -- a metric Bostic has focused on as evidence of inflationary pressure spreading in the economy.
"We are seeing things underlying in the economy that suggest inflation pressures are up, and that's really a source of concern," said Bostic. While not a voter in rate policy this year, he has said he feels the Fed needs more data before deciding to resume rate cuts, and that only a single quarter-point reduction is likely to be warranted this year given the uncertainty over how tariffs will affect prices.
Investors expect two cuts, beginning at the Fed's September meeting.
"The price pressures are real," Bostic said, referring to conversations he and his staff have had with regional business officials.
The Fed's focus on tariff-driven inflation and the reluctance to cut interest rates has angered President Donald Trump, who wants deep cuts to the Fed's current benchmark rate of 4.25% to 4.5%.
News reports on Wednesday that Trump was nearing a decision to try to fire Powell sparked a sell-off in stock and bond markets that reversed after the president clarified that he had no plans to dismiss the Fed chief -- as much as he says he would like to replace him.
Bostic said he tried not to focus on the many news reports about the Fed.
"We've got a very complex situation in terms of the economy," Bostic said, with his attention on "the things that actually matter."
(Reporting by Howard Schneider; editing by Diane Craft)
