Atlanta Fed President Bostic expects job losses but says there’s a really good chance of hitting 2% inflation without wrecking the economy

Federal Reserve Bank of Atlanta President and Chief Executive Officer Raphael W. Bostic speaks at a European Financial Forum event in Dublin, Ireland, on February 13, 2019.

Clodagh Kilcoyne | Reuters

Raphael Bostic, President of the Federal Reserve Bank of Atlanta, appeared on CBS’s Face The Nation Sunday morning with a continued commitment to the 2% inflation target and a cautiously optimistic outlook on the way there.

The country’s central bank raised its target federal funds rate by 75 basis points to between 3 and 3 1/4 on Wednesday. Bostic believes the Federal Reserve can meet its 2% inflation target without seriously damaging the economy.

“I think at the Federal Reserve we’re going to do everything we can to avoid a deep, deep pain.” Bostic told Face the Nation.

The latest report put inflation at 8.3% last year. The Fed aims to dampen demand in the economy to allow prices to stabilise, but some fear the tough policy could trigger further economic turmoil.

Bostic recognized that there will likely be job losses as a result of the Fed’s actions. However, compared to previous Fed tightening, Bostic believes that “there’s a really good chance that the job losses will be less than what we’ve seen in other situations,” he said in Face the Nation.

Bostic sees “positive momentum” in the economy despite two consecutive quarters of negative GDP growth, a sign used by some to identify a recession.

“We still create a lot of jobs every month. So I actually think the economy has some capacity to absorb our actions,” Bostic said, noting “substantial job growth” in his bank’s hometown of Atlanta. “My expectation is that we’ll get better inflation control over time.”