Federal Reserve Bank of Atlanta President Raphael Bostic said on Monday that inflation is not falling to the 2% target as fast as predicted by the Fed and that inflation expectations are "moving in a troubling way." He told CNBC that the impact of current trade uncertainties will take three to six months to "settle" and that the future tariff policy will impact the number of interest rate cuts.

Turning to Moody's downgrade, Bostic said it will "cut across" both the economic data and financial markets and will have implications for the cost of capital. He said the Fed will analyze its effect on the demand for US debt and the economic outlook. He added that treasury markets are currently "functioning quite well," but that uncertainty brings higher risks and that the Fed "only controls one part of the price of capital."