Atlanta Federal Reserve Chairman Raphael Bostic said Monday he is not worried about the US economy overheating, although he believes growth could take place faster than many expect.
In an estimate long before most of his colleagues, Bostic, a voting member of the Federal Open Market Committee, drew attention recently because he said he believes the Fed may have to raise interest rates by mid-2022. .
He relied on his anticipation that the economy could quickly recover from the Coivd-19 recession, as vaccinations become more widespread and the pumped stimulus begins to move to more people in need.
Most Fed officials, although anticipating strong growth by the end of this year, do not see rate hikes until 2023.
“This recession has never been like this, so the recovery will be like that,” Bostic told CNBC’s Closing Bell. “I think there are a few things here. When we talk about 2023, 2024, that’s the road there and a lot of things will happen that could go one way or another.”
“Many of the recent developments have been positive,” he added. “We should be open to the possibility that things will happen more strongly than they would otherwise.”
To date, Congress has allocated about $ 5 trillion in aid to the economy, and the Fed has contributed near-zero short-term lending rates and more than $ 3 trillion in liquidity through its large-scale asset purchase program. , also known as quantitative relaxation.
Some market participants have recently wondered when the Fed could start withdrawing from accommodating policies now that vaccines have begun, more fiscal incentives are about to appear and signs of inflation are beginning to cease.
Although he sees rate hikes a year and a half away, Bostic added that he believes the economy still needs a lot of help now.
“The main goal for this is to keep people as whole as possible,” Bostic said. “We know that when you lose so many jobs, there will be holes to fill.”
The Fed is committed to keeping rates low and pumping liquidity, even if inflation modestly exceeds the central bank’s 2% target. Bostic said he believes this is important, given the Fed’s focus on an “inclusive” employment mandate that seeks to build earnings as broadly as possible on racial and income groups.
While the Fed said it would tolerate higher inflation, Bostic said he still did not see worrying signs about price pressures.
“It’s not really the level of inflation, but much more the trajectory as we move forward, which I will focus on to get answers if the economy could move to places that make me uncomfortable,” he said.
Bostic also said that he has recently watched stock market price fluctuations for companies, including GameStop and others, but said he believes it is more of a regulatory issue than a monetary policy concern.