The Federal Reserve knows it has ‘a fight ahead’ to bring inflation down but is committed to the task, said Atlanta Fed President Raphael Bostic, on Tuesday.
In a new essay published on his bank’s website, Bostic said the Fed is committed to keeping the economy “as strong as possible.”
“With the harm that higher prices cause Americans, and the risk of slower economic growth that accompanies higher interest rates, I will be resolute, but purposeful, in my view of the appropriate pace of tightening monetary policy,” he said.
Bostic said there was a “glimmer” of good news on inflation in July but it was too early to claim victory.
Core services inflation continues to drift upward and inflation in services prices tends to be more persistent than goods inflation, he noted.
Overall, price pressures remain stubbornly widespread, he said.
Bostic said the Fed is not done raising interest rates.
If incoming data clearly show that inflation has begun to slow, that might give the Fed reason to “dial back” from the hikes of 75 basis points that the FOMC implemented in the last two meetings.
Bostic said a key question was how high interest rates needed to go to have a “restrictive” effect on U.S. economic growth.
Another question was how long will it take Fed interest-rate policy to affect inflation.