(Bloomberg) — Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said policymakers have time to monitor how the economy develops and be patient when it comes to interest rate movements.
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“Today I expect that we will continue like this slowly and steadily, and if we continue like this, then I think the current situation will be restrictive enough to bring the inflation rate to the 2 percent mark,” said Bostic in a Bloomberg TV interview with Michael McKee.
He added that he believes officials can get inflation to a level “close to our target without causing a recession.”
The Federal Open Market Committee, which sets policy, kept interest rates at a 22-year high for the second straight day on Wednesday. Chairman Jerome Powell told reporters in a news conference that it was an open question whether the central bank would need to raise interest rates again and that the Fed was “treading cautiously,” an assessment that often suggests reluctance to raise rates in the short term.
Policymakers have said they want to raise interest rates to a level that is “sufficiently restrictive” to put inflation on a meaningful path to 2% and then keep it there for some time. Bostic said his forecast assumes interest rates will remain high into the second half of next year, about 8 to 10 more months.
“It’s still a ways off and there’s still a lot to watch and monitor as we think about understanding how the economy is evolving,” Bostic said.
Read more: Fed’s rate hike cycle appears to be complete after US jobs report shows slowdown
The Atlanta Fed chief’s comments came after a report showed a slowdown in the labor market. Nonfarm payrolls rose by 150,000 last month after a downward revision of 297,000 in September, according to a Bureau of Labor Statistics report Friday. The unemployment rate rose to 3.9% and monthly wage growth slowed.
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Bostic, who is among the most dovish Fed policymakers, has argued since June that the central bank should hold off on further interest rate hikes because previous aggressive measures would slow the economy and gradually ease price pressures.
As inflation slows, real interest rates rise, so monetary policy becomes more restrictive in a “passive tightening,” which should lead to downward pressure on prices, said Bostic, who took office in 2017.
Although he does not predict a recession in his base case, growth will have to slow in the coming months. The US economy grew 4.9% in the third quarter, supported by strong consumption.
“We’re going to see some kind of slow, steady, methodical growth,” Bostic said. “It won’t cause much additional pain and hassle for American families.”
(Updates with further comments from Bostic in fifth paragraph.)
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