Federal Reserve Bank of Atlanta President Rafael Bostic was cautiously optimistic Sunday that the Fed will be able to reach its goal of 2% inflation while avoiding "deep, deep pain" to the economy, but bringing matters back to where they should be will not be easy, he warned.
But at this point, Bostic said on CBS's "Face the Nation," inflation remains too high, and "we really need to do all that we can to make it come down."
The Fed last week raised its key interest rate by a substantial three-quarters of a point for a third straight time, but Bostic said Sunday that in his talks with business leaders and people in the southeast, "they are concerned, but they do still feel that there's a way to get to 2% in terms of inflation that will still leave them in a good place. I'd leave our economy in a place where it is poised to grow and be resilient."
The source of the nation's spiraling inflation is that the nation's high demand is outpacing its low supply, and as long as that is happening, prices will keep going up, said Bostic.
"We've got to narrow that gap and what we were hoping would happen is that we'd see some movement on the supply side, to move the supply up" but the demand hasn't lessened, Bostic continued.
"That has meant that we have had to turn to our policies to try to take demand down and reduce this level," he said. "I think [that] demand is starting to shrink and ultimately that will start to pay dividends when we think about inflation levels."
There have been two back-to-back quarters with negative gross domestic product growth, which traditionally is a sign of recession, but Bostic said there are other numbers that suggest the economy has positive momentum as well.
"We're still creating lots of jobs on a monthly basis, and so I actually think that there is some ability for the economy to absorb our actions and slow in a relatively orderly way," Bostic said. "But we need to have a slowdown. There's no question about that."
Meanwhile, in June, JPMorgan Chairman Jamie Dimon predicted an "economic hurricane," said show host Margaret Brennan, but Bostic said he does not know if he would describe the situation that way.
"Lots of things that have happened over the last several months that really have been unexpected and have made our job more difficult," he said. "The war in Ukraine definitely disrupted supply chains and I think set us back in terms of our recovery by many months. And so that's real. But there are also some positive things happening."
Bostic also responded to recent polling in the South, where 55% of Georgia voters have described the economy to be good, compared to 28% of people nationwide.
"I can't speak for the rest of the country, but I will tell you, as for here in Atlanta, there is still considerable job growth," said Bostic, noting that the labor shortage is also difficult there. "Businesses are saying that they are seeing a lot of economic potential and that is shaping, I believe, the willingness to invest in the future."
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