MNI: Fed's Bostic: Giving Equal Attention to Employment Goal
Federal Reserve Bank of Atlanta President Raphael Bostic said Wednesday he's now equally concerned about attaining full employment as he is about keeping inflation under control.
"Right now, I am not quite prepared to declare victory over inflation. Though they have declined significantly, risks to meeting our price stability mandate remain," he said in an essay published on the Atlanta Fed website. "At the same time, we must not maintain a restrictive policy stance for too long. I believe we cannot wait until inflation has actually fallen all the way to 2% to begin removing restriction because that would risk labor market disruptions that could inflict unnecessary pain and suffering."
The labor market is weakening, though not weak, he said. Employers in the Atlanta Fed region say they're hiring more cautiously but few are contemplating layoffs, he noted. Beyond the labor market, the economy is slowing but not about to collapse, he said.
"Even as the gross domestic product numbers remain strong, business leaders tell my staff and me that demand is weakening. And most say they are bracing for further softening," he said. The elusive soft landing "may be within reach."
Bostic gave no specific details on his view of the appropriate path for policy. The FOMC is expected to begin lowering interest rates at its meeting later this month. (See: MNI POLICY: Fed Prefers Gradual Rates Easing If Jobs Allow)