This past Sunday, Atlanta Federal Reserve Bank President and CEO Raphael Bostic issued the statement that the country needs to go through a bit of economic pain right now in order to dodge more severe pain down the road.
While making an appearance on CBS’s “Face The Nation,” Bostic stated that the method to deal with the rapidly climbing inflation was for the Federal Reserve to rein in economic demand. In order for that to happen, it needs to pull the belt tighter on its monetary policy, which he did point out would at first slow down the economy further. However, he explained further that the act of dragging the economy down will mean further economic pain and job losses, and that such pain will be needed in order to dodge even worse pain at a later point.
“[I]nflation is high. It’s too high,” stated Bostic while talking to host Margaret Brennan. “And we really need to do all that we can to make it come down. And when we think about its source, it’s because we have very high demand.”
“We have not enough supply,” he went on. “[W]hat we were hoping would happen is that we’d see some movement on the supply side, to move the supply up so that there wasn’t so much of an auction on goods that are in the marketplace. But that hasn’t happened. And that really has meant that we have had to turn to our policies to try to take demand down.”
Bostic toss out the concerns issued to him which stated that the U.S. is already in a recession in the wake of two consecutive quarters of negative GDP growth, and made the claim that the economy was “still creating lots of jobs on a monthly basis.”
He stated that there must still be a further slowdown of the economy, “[b]ut I do think that we’re going to do all that we can at the Federal Reserve to avoid deep, deep pain. And I think there are some scenarios where that’s likely to happen.”
“It’s not going to be easy,” explained Bostic. “There will likely be some job losses. But I think if you look over the historical history here and our economic experiences, there’s a really good chance that if we have job losses, it’s going to be smaller than what we’ve seen in other situations. And that’s what I’m banking on.”
These comments come in the wake of the Federal Reserve moving interest rates up by 75 basis points, or roughly 0.75% this past week.
