(Finance) – “As we quickly bring monetary policy back to a more neutral position to bring inflation closer to our 2% target, I intend to proceed with intention and without recklessness“. This was stated by the president of the Federal Reserve in Atlanta, Raphael Bostic, in an article published on the US central bank’s website. The banker called for caution at a time when the US central bank is stepping up its fight against runaway inflation, which has peaked in 40 years.
“We have seen throughout the pandemic what events and Market changes can occur rapidly and in ways that alter dramatically the prevailing economic dynamics, both positive (the rapid rebound in employment immediately after the initial lockdown) and negative (the rapid increase in the delta and omicron variants) – he explained – We must all be ready for the unexpectedassess how risks have changed when they happen and be aware of changes in the strength of the economy. “
“Given the very high level of inflation, some may be surprised that I introduced a little caution here – he added – But remember this: even fire trucks with blaring sirens slow down at intersections so as not to cause further preventable problems. “According to Bostic,” those responsible for monetary policy must be aware of these uncertainties and proceed with caution in tightening policy“.
Bostic also addressed fears of the spiraling price-wage increase. “To be clear, right now I see no clear signs of a wage-price spiral In the data nor in conversations with business leaders, however, wage-price dynamics are among the myriad uncertainties in the economy that require careful surveillance and require great caution on the part of monetary policymakers as we recalibrate our own. policy”.
According to the economist, “alongside supply, demand for labor could weaken if tighter financial conditions held back the economy’s overall demand. If this happens, employers may be able to reduce the numerous vacancies rather than cut actual jobs. That would be a path for one so-called soft landing, achievable but far from obvious“.
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