Following Federal Reserve Chair Jerome Powell’s hawkish message at the annual Jackson Hole symposium, Atlanta’s Fed Bank President Raphael Bostic expanded on the economic “pain” Americans should brace for.
“I think the chair was trying to prepare people for the possibility that as the economy slows down, we might have some job loss and we might have some slow down in business, but we don’t know exactly how much there will be,” Bostic told FOX Business’ Edward Lawrence in an interview on “Varney & Co.Friday.
“My hope is that if that happens, it will be a relatively mild impact,” the president continued. “I don’t think it’s in our interest to have people be surprised if that comes to pass.”
In Powell’s highly-anticipated speech Friday, the Fed Chair reiterated a pledge to “forcefully” fight inflation that is still running near the hottest pace in 40 years and wrestle it closer to the Fed’s 2% goal.
Even with four consecutive interest rate hikes, including two back-to-back 75 basis point increases, Powell stressed that the Fed is not in a place to “stop or pause” – an unwelcome sign for investors who were predicting a rate cut next year .
Bostic admitted either he “could go way” between recommending a 50 or 75 basis point hike in next month’s meeting.
“Part of this is really about, how much momentum we see in the economy, and that will determine how much of a move we should be making,” Bostic said. “I think we should try to get to that terminal rate as quickly as possible.”
August’s jobs report and CPI data, which will be released just days before the Fed’s September meeting, should provide a better picture of how the economy has slowed downaccording to the Atlanta Fed president.
“We have another inflation report that’ll tell us how much the economy is slowing down and give us a sense about how much work we’re going to have to do with our policy to get inflation back down to 2%,” Bostic explained .
The Fed president noted that a recession is not in his current economic forecast.
“Inflation is high because demand is high and supply is not responding,” Bostic said. “To the extent that we get supply response, that’s less that we’ll have to do, and that will actually be expansionary for the economy.”
Atlanta’s Fed Bank president also touched on how the government’s fiscal spending creates “somewhat of a headwind” for how the Federal Reserve tackles record-high inflation.
“It’s definitely trying to accomplish things other than inflation reduction, but some of those other things are appropriate and needed,” Bostic pointed out. “I do think that we’re going to have aggregate growth that’s lower than the long-run potential, but that’s got to be natural if we’re going to start to see demand slow.”
FOX Business’ Megan Henney contributed to this report.