© Reuters FILE PHOTO: Federal Reserve Bank of Atlanta President and CEO Raphael W. Bostick speaks at the European Financial Forum event in Dublin, Ireland, February 13, 2019. REUTERS/Clodagh Kilcoyne
WASHINGTON (Reuters) – Atlanta Federal Reserve President Rafael Bostick said on Sunday he believed the U.S. central bank could keep inflation under control without causing significant job losses to the economy.
“If you look at history … there’s a very good chance that we’ll have fewer job losses than past recessions,” Bostick said on CBS’ “Face the Nation.”
“Inflation is high. It’s very high. And we have to do everything we can to bring it down,” Bostick said, adding that the Fed’s plan for higher interest rates is to slow the economy, bring demand for goods and services into line with supply, and the lowest inflation in four decades.
How deep and lasting a cutback would be needed — and the potential job losses — remains a matter of debate, with Fed officials continuing to argue that companies are likely to lay off workers who have been hard to hire during the COVID-19 pandemic. Epidemic.
“There’s a lot of positive momentum … there’s some ability for the economy to absorb our actions and slow down relatively systematically,” Bostick said, citing continued strong growth in payrolls.
Bostick also said, “We have to be cool … we’re going to do everything we can at the Federal Reserve to avoid deep, deep pain.”
Bostick spoke after a volatile week in global financial markets.
The Fed on Wednesday approved its third consecutive three-quarter point interest rate hike and released forecasts that indicated they would stay higher and longer than investors expected.
Along with similar measures by several other central banks, the news sparked a sell-off in equity markets and warnings that the risks of a global recession were rising as many monetary authorities simultaneously tightened policy.
Other cracks appeared.
Japan, whose imports and thus domestic inflation have been hit hard by a strong dollar, has intervened to strengthen the yen for the first time in a quarter century.
The UK’s proposed tax cuts appear to be at odds with the Bank of England’s efforts to tackle inflation with interest rate hikes. The pound fell 3.5% against the dollar to its lowest level since 1985.
Despite global concerns, Fed Chairman Jerome Powell said the central bank would keep its focus on US inflation and would need to see a convincing rate cut “in the coming months” to change its outlook.