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Bostic: ‘Economic history does not seem to be repeating itself’

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(The Center Square) — The country’s inflation rate will “continue to decline,” though its pace will be slower “than the pace implied by where the markets signal monetary policy should be,” the head of the Atlanta Fed said.

In remarks to Money Marketeers of New York University Inc., Federal Reserve Bank of Atlanta President and Chief Executive Officer Raphael Bostic said that while “broadly speaking,” the economy “is in a good position,” no matter the times, good or bad, “monetary policymaking is a highly complex endeavor not fit for bumper-sticker solutions.”

“As some colleagues and I have noted, we will likely soon contemplate the appropriate time for monetary policy to become less restrictive,” Bostic said, according to a transcript. “Right now, a strong labor market and macroeconomy offer the chance to execute these policy decisions without oppressive urgency.

“Put simply, we have made substantial and gratifying progress in slowing the pace of inflation,” Bostic added. “All things considered, the US economy is in a good spot, even an enviable spot compared to other major economies.”

Bostic said that despite the positive news, “victory is not clearly in hand,” making him “not yet comfortable that inflation is inexorably declining to our 2 percent objective.” He noted that sentiment “may be true for some time,” even if January’s consumer price index report is “an aberration.”

“Finally, let me plainly state a reality that I think is quite important: economic history does not seem to be repeating itself,” Bostic said. “While this will be something that economic historians will ultimately debate over coming years, my staff and I have been wrestling with what we think might be two reasons for this.

“For one, we are still navigating the turbulent wake of what we hope was a once-in-a-century global pandemic,” Bostic added. “Few models contemplated severe kinks in global supply chains resulting from clogged seaports and factory closures; months when tens of millions of consumers would be homebound while retail stores, entertainment venues, and the travel industry were paralyzed; governments providing trillions of dollars in fiscal support; and the US labor market abruptly losing 20 million jobs.”