At the start of the week, it appeared that more members of the Federal Reserve were adopting a softer stance on the future of interest rates. However, yesterday those who disagree with this view made themselves heard.

Atlanta Federal Reserve Bank President Raphael Bostic said in a speech that he still considers one interest rate cut this year likely, reiterating that there are reasons to doubt that the inflationary effects of tariffs will be temporary. "The question is whether tariffs are a one-time measure or if they will have more lasting consequences and could even trigger structural changes. This is currently the most important question we face," Bostic said Thursday during a virtual discussion hosted by the Florida Institute of CFOs.

Bostic's statement reflects the ongoing uncertainty over the path of inflation and economic growth in the United States. On one hand, the economy remains resilient, but the labor market is not. Inflation, while slowing, is still above the Fed's 2% target. In addition, geopolitical tensions and trade disputes create further risks for the economic outlook. Considering these factors, the Fed faces the difficult task of balancing the need to contain inflation with the target of sustaining economic growth. Lowering interest rates could stimulate activity but may also fuel inflation. Conversely, keeping rates unchanged could slow growth while helping to curb price pressures.

Bostic's skepticism about the temporary nature of tariff-driven inflation highlights concerns that trade wars could bring long-term structural changes to the global economy, contributing to higher prices. In this environment, the Fed is likely to act cautiously and closely monitor incoming data before deciding on further adjustments to monetary policy. Any rate cut will depend on inflation showing a sustained decline toward target and the absence of significant risks to growth.

The head of the Atlanta Fed also noted that there are grounds for some skepticism about whether the tariffs being introduced today fit the classic example of tariffs that cause only a one-time, temporary increase in prices.

Last week, the Fed kept the key rate unchanged. Fed Chair Jerome Powell stated that the labor market remains stable despite downside risks and that policymakers will receive more detailed data on inflation and employment before the September meeting. However, subsequent data showed that the Fed's wait-and-see approach has already hit the labor market, raising doubts about future economic stability. Last Friday's figures revealed that job growth over the past three months was significantly weaker than previously reported, as were consumer spending figures, which continued to decline.

Bostic said the employment report was unexpected and that its revision reflected instability in the economy. Nevertheless, he added that there are reasons to believe the economy's fundamentals remain strong.

EUR/USD technical picture – Buyers now need to secure the 1.1690 level. Only then will they be able to target a test of 1.1730. From there, the path opens toward 1.1760, though doing so without support from major players will be challenging. The ultimate target remains the 1.1800 high. In the event of a decline, significant buying activity is expected only near 1.1655. If no buyers appear there, it would be preferable to wait for a retest of the 1.1610 low or consider long positions from 1.1565.

GBP/USD technical picture – Pound buyers need to break the nearest resistance at 1.3450. Only this will allow them to aim for 1.3475, above which it will be difficult to advance. The final upward target would be the 1.3502 level. If the pair falls, sellers will try to retake control at 1.3405. If they succeed, a breakout of the range will deal a serious blow to the bulls' positions and push GBP/USD toward the 1.3375 low, with potential to reach 1.3350.