WASHINGTON (AP) — The Federal Reserve has reached a delicate stage in its fight against inflation. Its policymakers have raised their key interest rate to about 5.4%, its highest level in 22 years, to try to slow borrowing and spending and cool inflation pressures. They now are considering whether to raise the rate even higher — a move that would heighten the risk of a recession — or leave it at its current level for an extended period. Though inflation has slowed for the past year, it's showing
WASHINGTON — The Federal Reserve has reached a delicate stage in its fight against inflation.
Raphael Bostic, president of the Federal Reserve Bank of Atlanta and a member of the Fed’s interest rate policy committee, doesn't think another hike is needed. But Bostic favors keeping the benchmark rate at its current level well into 2024. The Associated Press interviewed Bostic in late August and it has been edited for length and clarity:
So we saw a lot of policy that was put in to support families and businesses. We saw a lot of families actually continue to get income and not be able to spend because they were on lockdown. And both of those realities have left businesses and families just stronger than they would historically be at this stage in an economic cycle. And so a lot of the tightening of our policy is being absorbed by that strength.
Q. Some economists say the rate hikes haven’t yet had their full impact on the economy. Do you agree?And it’s one of the reasons why I think that it’s appropriate to just be cautious at this stage. We don’t have to rush and we can let our policy do its work and continue to slow the economy down and continue us on that road to the 2% target.
Over the last 6 to 8 months we’ve seen a number of revisions on the employment side which would also tell us that things are slowing down in ways that are relatively orderly and that is also something that gives me some comfort that our policies are working well.
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