Atlanta Federal Reserve Bank President Raphael Bostic said that monetary policy is already restrictive enough to bring inflation back down to 2% over a reasonable period.
“I believe policy is suitably restrictive. We should be careful and patient, allowing the restrictive policy to continue to affect the economy, lest we risk tightening too much and incurring undue economic hardship,” said Bostic.
“That does not imply I support policy relaxation anytime soon,” he added.
“When the Federal Reserve meets in less than three weeks, it is largely assumed that the policy rate will remain in the present range of 5.25%–5.5%,” according to “Reuters.”
However, financial markets are putting in almost equal chances that the Fed will eventually raise that rate another quarter-point by year’s end, owing to persistently rising inflation, stronger-than-expected economic growth, and persistently low unemployment, which was recently recorded at 3.5%.
As of mid-June, a substantial majority of US central bankers believed a Fed policy rate in the 5.5%–5.75% range would be required to defeat inflation.
Bostic has been in the Fed’s minority, warning against over-tightening policy and causing unnecessary harm to employment and people.
“Interest-rate rises of 5.25 percentage points since March 2022 have already helped put inflation on a definite downward trend,” according to Bostic, who noted that consumer price inflation has declined from a 9% peak last summer to 3.2% in July.
The Atlanta Federal Reserve Bank President believes that the underlying rate of inflation is already “near the Fed’s objective.”
