(Bloomberg) -- Federal Reserve Bank of Atlanta President Raphael Bostic said officials should be cautious with policy decisions given uneven progress on lowering inflation and err on the side of keeping interest rates elevated to achieve their price stability goals.
Bostic, speaking in a podcast recorded on Dec. 9 and released Tuesday, also said his outlook is for inflation to continue to gradually decline this year to the Fed’s 2% target. He said he expects price pressures to ebb despite moments where it may look like progress is stalling or inflation is moving more aggressively.
“Given that kind of bumpiness in the measures, I think that will call for our policy approach to be more cautious,” Bostic said in the conversation recorded by the Atlanta Fed ahead of the central bank’s Dec. 17-18 policy meeting.
Fed officials lowered interest rates for the third straight time last month, bringing their benchmark rate down by a full percentage point since September. Bostic voted in favor of that decision. Median projections released at the December meeting showed policymakers see just two quarter-point rate cuts for this year.
“I want to make sure we get the right signal, and make sure that our policy is calibrated to that right signal. And if we’ve got to err, I would err on the upside,” Bostic said in the podcast. “I would want to make sure — for sure — that inflation gets to 2%, which means we may have to keep our policy rate higher longer than people might expect.”
Fed Chair Jerome Powell has said officials will be looking for further progress on inflation when deciding on future rate adjustments. Other officials, including Fed Governor Lisa Cook, have said policymakers can move more cautiously with interest rate cuts, pointing to a sturdy labor market and sticky inflation.
Bostic said early last month, prior to recording the podcast, that the labor market was stable. He also said he thought inflation was on a sustainable path to the Fed’s 2% target despite some bumpiness in the data.
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