Overview of "We're trying to control what we can control": A Fed president reflects
Marketplace interviews Raphael (Rafael) Bostic, outgoing president of the Federal Reserve Bank of Atlanta, in one of his final public appearances. Over roughly an hour he reflects on his last Federal Open Market Committee (FOMC) meeting, explains why monetary policy faces unusually high uncertainty today, and lays out how structural shifts—AI, tariffs, immigration, and geopolitics—are changing how policymakers interpret data. Bostic stresses managing what the Fed can influence, preserving credibility on inflation, and being cautious in policy given the fog of rapidly changing economic conditions.
Key takeaways
- Bostic’s final FOMC participation was virtual due to weather; he used the moment to emphasize Atlanta Fed’s distinctive voice and urge adherence to the Fed’s mandates.
- Current policymaking is unusually difficult because many conventional models are less reliable amid overlapping shocks (pandemic, war, tariffs, AI).
- Dissents on the FOMC are not a dysfunction but reflect legitimate uncertainty and differing narratives about the future.
- Structural shifts (AI-driven automation, reduced immigration, persistent tariffs) may change what typical labor and output metrics mean and how policy should respond.
- Inflation remains a central concern: prolonged misses risk unanchoring expectations and damaging Fed credibility.
- Labor market readings are harder to interpret: low hiring may reflect technological substitution or uncertainty rather than pure weakness; labor supply constraints alter productive capacity calculations.
- Bostic does not forecast a recession; he believes the economy remains resilient but requires cautious policy and more time to “figure out” long-term implications.
Topics discussed
- Personal notes: Bostic’s last FOMC meeting experience, his parting remarks to colleagues.
- Monetary policy environment: heightened uncertainty, reliance on judgment vs. models.
- FOMC dynamics: dissents as signs of healthy debate in opaque conditions.
- Structural vs. episodic shifts:
- AI and technology’s potential to change labor demand and productivity.
- Tariffs and trade policy uncertainty increasing costs and stressing small businesses and some consumers.
- Immigration changes tightening labor supply.
- Consumer behavior: a K-shaped pattern—high spending among affluent households driving GDP even while many consumers feel stressed.
- Inflation risks: the danger of expectations drifting above target and the need to maintain credibility.
- Labor market interpretation: why single monthly job figures are less informative than before.
- Outlook: cautious optimism—robust output expected, no recession in Bostic’s view.
Notable quotes
- “We’re trying to control what we can control.” — on the Fed’s role amid events beyond its reach.
- “When the unexpected and the unusual is happening, those models become less effective and so then it’s much more art.” — about the limits of standard economic models today.
- “One, the longer we’re not at target the higher the likelihood that people will stop expecting that we will ever get to target.” — on inflation expectations and credibility.
- “I don’t have a recession in my outlook.” — summary of his near-term economic view.
What to watch (actionable signals)
- Inflation expectations and whether they re-anchor toward the Fed’s 2% target.
- Labor supply indicators: participation rate, immigration flows, and measures of labor productivity vs. capital (AI adoption).
- Hiring intentions vs. layoffs: firm-level hiring plans and job vacancy trends to distinguish technological substitution from weakness.
- Small-business distress: credit conditions, margins, and anecdotal reports of tariff-driven costs.
- Tariff policy and legal developments (including trade rulings) that shift firms’ cost forecasts and supply-chain decisions.
- Fed communication and voting patterns (dissent frequency and rationale) for hints on policy direction.
Context & related items covered in the episode
- Brief Marketplace segments: explanation of tariff changes and U.S.–China trade tools after a Supreme Court ruling; market headlines (stocks, yields); and a story on big AI chip deals (Meta/AMD) and potential circular financing risks in the AI hardware ecosystem.
- Tone: measured—Bostic acknowledges downside risks and turbulence but emphasizes resilience and the need for careful, credibility-preserving policy rather than alarm.
Bottom line
Bostic frames today’s policy challenge as managing within limits: the Fed must remain data-informed and credible while recognizing that conventional metrics and models are under stress from multiple, overlapping structural changes. He urges caution and patience—no recession is his baseline—but warns that failing to bring inflation back to target or losing credibility would pose serious longer-term costs.