Atlanta Federal Reserve Chairman Raphael Bostic said he believed the institution could raise interest rates to deal with strong inflation without tipping the country’s economy into recession. “The overall objective of the Federal Open Market Committee (FOMC) is to bring inflation back to our target without causing significant economic dislocation,” Bostic said in an essay posted on the Atlanta Fed’s website on Tuesday. “While it is a delicate undertaking, I believe that economic conditions – including the labor market – are strong enough to allow us to achieve this result.”
Bostic is not a voting member of the Fomc this year. The Fed is expected to raise rates by half a percentage point at its June and July meetings and follow up with more hikes thereafter as it seeks to reduce inflation from 40-year highs.
Some economists fear that the US central bank’s path will lead to contraction of the economy and increase unemployment, even as most central bankers remain optimistic that this scenario can be avoided.
Bostic said he expects to raise rates quickly, but added: “I plan to proceed with intent and without recklessness. We have seen during the pandemic that events and changes in the market can happen quickly and in ways that dramatically alter the prevailing economic dynamics.”
The Fed official said he supported raising rates but added that the central bank may need to pause interest rate hikes in September to take stock of the economy’s performance.
