Federal Reserve's Bostic: The U.S. economy may experience a longer period of high inflation

US inflation is likely to remain high for a period of time that could seep into consumer psychology and it could take a year or more for businesses to adjust to ongoing changes in trade and other policies, the Federal Reserve's Bostic said on Thursday. That hinted at reasons to be patient before cutting interest rates. "The main conclusion is that price and broader economic adjustments to US trade and other upcoming policies, as well as geopolitical developments, will not be short and simple one-off price changes, as standard textbook models suggest," he said. "Instead, this is looking increasingly like a process that may take a year or more to fully conclude." "If I'm right, then the US economy could experience a longer period of high inflation." "I don't expect prices to spike significantly, but to rise steadily," Mr. Bostic said, which could seep into consumer inflation expectations and pose a bigger challenge for the Fed. He also said Thursday's nonfarm payroll data showed more job creation than expected, the unemployment rate edged down to 4.1 percent, "labor market conditions remained generally healthy," and did not yet show signs of worsening that might require a pre-emptive rate cut. He said the current high level of uncertainty about the direction of employment, growth and inflation "is not the time for a major shift in monetary policy," and that the FOMC's current wait-and-see approach remained appropriate.