(The Center Square) — The head of the Federal Reserve Bank of Atlanta says the cumulative effects of monetary policy adjustments are showing signs of working.
The Federal Open Market Committee recently voted to maintain the 5% to 5.25% federal funds rate. While the FOMC’s Summary of Economic Projections “are not true forecasts in the statistical sense” or “commitments to follow a particular course of action,” financial market watchers view these projections as indicators of economic conditions, Raphael Bostic, president and CEO of the Federal Reserve Bank of Atlanta, said.
In remarks to the Annual Dinner of the Irish Association of Investment Managers in Dublin, Ireland, Bostic said he does not “fully share” the view of “the median committee participant” that the FOMC should do more to bring down inflation.
“I have consistently expected the US economy to be quite strong,” Bostic said, according to a transcript. “I’ve also long expected inflation in the United States to be persistent and attenuate at a measured—some would say slow—pace.
“But to be direct, I believe we are just now beginning to see signs that the cumulative effects of monetary policy adjustments that began last year are showing up in the real economy, including in labor markets,” Bostic added. “Furthermore, I believe that our latest readings on inflation indicate that we are making progress on reducing inflation toward the FOMC’s goal of 2 percent, as measured by the Personal Consumption Expenditures price index.”
While the feds are working to reduce inflation, Bostic noted economic growth appears to be slowing.
“Pandemic-related effects on the economy have not fully unwound. US and global economic growth appear to be slowing,” Bostic said. “There is concern about financial stability in light of recent liquidity and credit issues in the banking system.
“We are not living in a standard business cycle,” Bostic added. “We lack proven formulas to navigate the economic chaos of a global pandemic and its aftermath. Events have foreclosed any sense of certainty in forecasting economic conditions.”
