Atlanta Fed President Raphael Bostic said it will take a “couple of months” to understand the inflation dynamics that are underway as the economy is recovering from the pandemic. He backed a continued easy policy stance.
“I don’t think we’re going to have clear answers on this at least until early fall, and it may take longer than that. It all depends on how rapidly we recover,” Bostic said, in an interview on CNBC Monday.
“We still are 8 million jobs short of where we were pre-pandemic and until we make substantial progress to close that gap, I think we’ve got to have our policies in a very strongly accommodative situation or stance,” Bostic said.
The Fed is buying $120 billion per month of assets, as well as keeping its main interest rate close to zero, in an effort to spur economic growth.
The annual growth rate of the consumer-price index hit a 13-year high in May, rekindling questions about whether the Fed might let the inflation genie out of the bottle.
Bostic said the Fed had anticipated the high inflation readings and was hard at work to determine which price gains were going to be temporary and which “are more structural.”
He said his staff would also be surveying consumers and employers to gauge how they are reacting to the inflation data and whether they see an “end point” for price gains.
“If they see an end point, they’re not really going to do things that are going to be fundamentally different than where they were pre-pandemic, that’s not something we have to respond to,” Bostic said.
were set to open lower on rising inflation fears in the market.