Federal Reserve Bank of Atlanta President Raphael Bostic said defeating elevated inflation was the US central bank’s top priority and he’s optimistic this can be achieved without hammering the labor market.
“Getting inflation down is Job One, inflation is too high,” Bostic said Friday at an event in Atlanta hosted by the University of Georgia Terry College of Business. “I am trying to minimize the dislocation as we get inflation under control. I am hopeful” the Fed can do that, he added.
Fed Chair Jerome Powell, in congressional testimony this week, said policymakers expect interest rates will need to move higher to reduce US growth and contain price pressures, even though they held rates steady at their meeting last week. Fed officials’ forecast for two more quarter-point hikes this year is a “pretty good guess” if the economy performs as expected, he said.
Fed officials held rates steady last week after 10 straight increases, giving themselves more time to evaluate how the economy is responding to recent banking stress and higher borrowing costs. The move left the benchmark rate steady in a range of 5% to 5.25%.
Officials are starting to become more divided over the best course to take to cool inflation, which is abating but is still running higher than the Fed’s 2% target.
Federal Reserve Governor Michelle Bowman reinforced Powell’s hawkish remarks earlier Thursday, saying “additional policy-rate increases will be necessary” to curb inflation that is still unacceptably high.
That sentiment was echoed later by Richmond Fed President Thomas Barkin, who said he’d be “more than comfortable doing more” on rates if price pressures don’t ease as expected.
Officials are seeing some signs that policy is working but other signs are disappointing, Boston Fed President Susan Collins told MassLive.
Bostic and Chicago Fed President Austan Goolsbee have been supportive of patience and cited lags in monetary policy affecting price pressures.
