MNI: Some Fed Hiking Caution Is Needed For Soft Landing-Bostic

The Federal Reserve needs a little caution on rate hikes aimed at bringing inflation back to target, so as to avoid generating a recession, Atlanta President Raphael Bostic said Tuesday.

"Given the very high level of inflation, some might be surprised by my injecting some caution here. But remember this: even firetrucks with sirens blaring slow down at intersections lest they cause further preventable trouble," Bostic wrote in an essay for the Atlanta Fed's website.

"As we expeditiously return monetary policy to a more neutral stance to get inflation closer to our 2 percent target, I plan to proceed with intention and without recklessness," he wrote.

The soft landing is tied to rebalancing the strong labor market, he said, and at this point there's no evidence of a wage-price spiral. While boosting labor supply may be difficult, the economic landing may depend more on whether employers simply cancel some job vacancies rather than cut actual positions, he said.

"This would be a path for a so-called soft landing, which is achievable but far from a given," he said. "The Federal Open Market Committee has an overarching goal to return inflation to our target range of around 2 percent without triggering significant economic dislocation. Inflation is too high and must be addressed."