Fed's Bostic: Effort to bring inflation down is not complete

Atlanta Fed President Raphael Bostic stated that inflation is still very high and that they will continue to work to bring it down to the target level of 2 percent. Atlanta Fed President Raphael Bostic stated that the central bank’s work to cool inflation is still incomplete. Bostic said in a speech on Thursday, “Inflation is high, inflation is still very high and we need to bring inflation down to our target level.” Bostic noted that there is still more they need to do and that they need to determine how quickly they need to increase policy rate in order to bring inflation down to 2 percent. Fed officials have implemented the most aggressive interest rate hikes in the last 40 years to get inflation under control and have pledged to continue these increases in order to reach the target level despite the potential problems these moves could create for households and businesses. The Central Bank has implemented 75 basis point hikes in its last two meetings and Fed Chair Jerome Powell announced that a new increase of the same magnitude is on the table depending on incoming data at the meeting to be held on September 20-21. “It is very difficult to achieve a soft landing” Stating that the incoming data for the US economy is mixed and that while some sectors such as housing are showing signs of cooling, the labor market remains strong, Bostic said, “The Fed is taking the risk of a contraction in the economy, it is trying to have a soft landing for inflation without losing jobs. However, a soft landing is very difficult to achieve. A soft landing has only been achieved once or twice in the history of this country.” Emphasizing that there is a risk of a slowdown in the economy when demand is brought down and that the economy will stop growing, Bostic said, “In an environment where the economy loses momentum, we may reach a situation that some describe as a recession.” Bostic has no voting decision at interest rate meetings this year.