Atlanta Fed President Raphael Bostic Open To Half-Point Rate Hike

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By CultureBanx Team

  • Atlanta Fed Reserve President Raphael Bostic is open to the possibility of the Fed increasing the federal funds rate by half a percentage point to bring inflation down
  • Out of the 12 Federal Regional banks, Bostic is the only Black person on the Federal Reserve’s policy setting committee

If inflation remains ridiculously high, Atlanta Federal Reserve Chief Raphael Bostic is open to the possibility of the Fed increasing the federal funds rate by half a percentage point, he told The Financial Times. This is double its typical amount and a tool it has not used in roughly two decades. Out of the 12 Federal Regional banks, Bostic is the only Black person on the Federal Reserve’s policy setting committee, meaning there’s only one African American with a direct say on U.S. monetary policy, which could ease the inflation pain we’re all feeling in grocery stores and at gas stations amongst other things.

Why This Matters: Bostic insists all options are on the table at the central bank’s remaining seven meetings this year. However, he is sticking to his call for three quarter-point interest rate increases.

“If the data say that things have evolved in a way that a 50 basis point move is required or [would] be appropriate, then I’m going to lean into that . . . If moving in successive meetings makes sense, I’ll be comfortable with that,” Bostic said to The FT.

The jobs report data could impact future Fed rate hikes, these are numbers Federal Reserve policymakers watch closely. They’re primarily keeping a close eye on wages for signs of inflation. The U.S. economy added 467,000 jobs in January, even though unemployment ticked up to 4%.

Bostic has previously stated that past periods of ultra-low unemployment have been followed by recessions. Ultimately, he wants the Fed to adopt a strategy that balances out super low rates while not running the risk of overheating by raising rates so much the economy tips into recession.

“If we do the three [interest rate increases] that I have in mind, that’ll still leave our policy in a very accommodative space,” Bostic said.

In addition to his role of steering monetary policy in the right direction. Bostic has been among the most outspoken Fed officials in an evolving conversation at the central bank about economic inequality. He warned that racist practices and policies, on top of their more obvious social and psychological toll, generate a lasting and pervasive drag on the economy as well, according to MarketWatch. The Atlanta Fed president has called out things like the impact of long-outlawed policies including how “redlining” Blacks out of white neighborhoods continues to influence the ability of minority families to amass wealth.

“Progress is incremental. Something more fundamental must happen,” Bostic said at a conference hosted by the Atlanta Fed and Princeton University.

Due to the Fed’s chronic white male problem it’s harder for the institution to pay closer attention to how minorities, and the economically dis-advantaged can be helped by central-bank policy choices. With the absence of Black voices at the highest levels of monetary policy, means that America’s flagrant racial problems are often ignored or misunderstood.

Bostic noted how the exclusion of farm and domestic workers from Depression-era social insurance programs excluded a disproportionate number of blacks from benefits, while both redlining and other housing policies undermined the accumulation of wealth.

What’s Next: In the meantime, back to monetary tightening, the central bank is widely expected to hike its benchmark interest rate, the first of many rate hikes in 2022 starting in March.

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CultureBanx Team

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